Singapore Financial Regulator Warns AI Companies Are Overvalued

The Monetary Authority of Singapore has warned that technology and artificial intelligence companies are trading at inflated valuations. In its annual review of financial stability published on Wednesday, the regulator he said that equity markets are seeing “relatively stretched valuations focused on the technology and AI sectors.”

The MAS said much of the recent rise in global equity markets has been driven by AI-related investments, leaving many investors heavily exposed to the sector. He also warned that some big tech companies rely on opaque financing structures that could mask leverage and amplify risks.

“Some Big Tech companies (mainly hyperscalers) have also turned to the use of new and potentially circular private financing agreements to finance their expansions,” the MAS wrote. “These include the use of vehicles for special purposes, private credit structures and new accounting treatment that could mask the leverage effect and increase the dependence on financing.”

The AI ​​industry has grown at a breakneck pace, with valuations for private and public companies alike. OpenAI, creator of ChatGPT, recently reached a $500 billion valuation and has been targeting a $1 trillion figure ahead of a possible 2026 IPO. Anthropic has nearly tripled its value since March, from $60 billion to $170 billion.

An AI bubble?

The frenzy has drawn comparisons to the dot-com bubble, when speculative optimism inflated tech stocks beyond their earnings potential. Regulators and economists have warned that the current AI boom may be fueled as much by hype as by real productivity gains.

Jordi Alexander, CEO of the trading company Selini Capital, said Decrypt the economy needs a high rate of growth to support high levels of government debt – and with most other sectors unable to keep pace, the AI ​​sector has seen massive amounts of investment and attention.

“With game-changing productivity gains from AI still on the distant horizon, questions of a temporary AI bubble are fair to ask,” he said.

“Many major AI companies will be financially exposed if the compound revenue story for them is not played out. We see this as a possibility, although there is enough progress made on the technology side that there is still hope that it will live up to expectations.”

Nirav Murthy, co-founder and co-CEO of Camp Network, agrees that valuations have exceeded fundamentals. “We’re in a phase where capital intensity, circular business structures, and opaque accounting can make growth seem inevitable when it’s actually well-financed,” he said. Decrypt.

But that doesn’t mean AI is a bubble. “It means that the next stage must be won with real economic unity,” he said.

He added that if investor sentiment cools, the pain will show first in long-dated stocks and private credit tied to data center buildouts.

Despite the risks, Murthy noted that parts of the AI ​​stack — particularly the major chipmakers and platforms — remain profitable. That said, he also warned that unresolved intellectual property disputes could weigh on the sector. “We’re seeing patterns built on questionable data sets, rights disputes thrown down the road, and legal risk treated as a line item,” he said.

“If the big players want sustainable profits, they need to lock in clean, clearly licensed, provenance-verified data as core infrastructure.”