Artificial intelligence startups are drawing unprecedented amounts of venture capital, but some of the world’s top investors are cautioning that early-stage valuations may be inflated, senior investment officials said on Friday. “There’s a bit of a hype bubble forming in the early-stage venture space,” stated Bryan Yeo, group chief investment officer at Singapore’s sovereign wealth fund GIC, during a panel at the Milken Institute Asia Summit 2025 in Singapore.

“Any startup with an AI tag is being valued at extremely high multiples relative to its modest revenue,” he added. “For some companies, that might be justified, but for others, it probably isn’t.” In the first quarter of 2025, AI startups secured $73.1 billion in global funding, representing 57.9% of all venture capital investment, according to PitchBook. This surge was fueled by mega-rounds such as OpenAI’s $40 billion capital raise, as investors scrambled to capitalize on the AI trend.

“Market expectations may be far ahead of what the technology can realistically deliver,” Yeo said. “The current AI-driven capital expenditure boom is concealing some potential economic weaknesses.” Todd Sisitsky, president of alternative asset manager TPG, warned that fear of missing out could be risky for investors, though opinions differ on whether the AI sector is in a bubble. Some AI companies are generating $100 million in revenue within months, while other early-stage startups are valued at $400 million to $1.2 billion per employee, he noted, calling these figures “breathtaking.”