Fund managers warn AI investment boom has gone too far (www.ft.com)

Fund managers are warning that the recent surge in investment tied to artificial intelligence has become overheated, with valuations and fundraising activity outpacing the underlying economic realities. The warning covers both public markets—where AI-linked stocks and SPACs have raced ahead—and private venture capital, where startups are securing large rounds without proven paths to sustainable revenue. These managers argue this froth risks a sharp re-rating that would hit speculative players hardest, tighten capital access, and force a reassessment of which AI businesses can deliver durable returns. For the AI/ML community this shift matters practically: a market correction would redirect capital toward ventures with clear unit economics, defensible data assets, and scalable product-market fit. Technical implications include renewed emphasis on compute efficiency (model pruning, distillation, transfer learning), cost-aware engineering, and measurable ROI from AI deployments rather than headline model sizes. It may also accelerate consolidation, raise scrutiny of benchmark claims and safety practices, and favor open-source and lightweight approaches that lower deployment friction. In short, investors want demonstrable business value and risk management, which will shape which research and engineering directions receive funding.