Will the AI bubble burst before the end of 2026?

Artificial intelligence has become the biggest investment story of our time. Tech giants are pouring billions into AI systems, data centers, and the chips that make it all work. Some Wall Street voices now warn this could be a bubble ready to pop.

A bubble means stock prices have raced far ahead of what companies actually earn, setting up a huge crash when reality catches up. On September 10, Capital Economics called AI a late-stage bubble, suggesting we are near the peak. But traders on Polymarket's contract see things differently. They price the chance of a burst in 2026 at just 11%.

The contract lays out six specific events, and at least three must happen within the same 90-day window before December 31 for it to resolve as a “Yes”. 

Two events target Nvidia, the company behind the chips that run AI models. Nvidia's stock would need to crash by 50% from its all-time high, or rental fees for its H100 chip would need to drop to $1 per hour and stay there for five days.

The other four events are much broader:

• A fund of 30 chip stocks, iShares PHLX Semiconductor ETF (SOXX), must fall 40% from its peak
• Any one of five major AI hardware companies, Taiwan Semiconductor Manufacturing Company Limited (TSM), ASML Holding N.V. (ASML), Broadcom Inc. (AVGO), Arista Networks, Inc. (ANET), or Super Micro Computer, Inc. (SMCI), must see their shares cut in half
• OpenAI or Anthropic must file for bankruptcy
• OpenAI must get acquired by another firm

One box is already checked. Super Micro, one of the five AI hardware makers, faced an accounting scare that cast doubt on its financial statements. Its stock has traded below half its record high every single day since July 2025. That means a burst now requires two more triggers within the same 90-day period.

However, the remaining tests look very hard to hit before year-end. Anthropic was on pace to bring in more than $65 billion annually by late July, making bankruptcy seem almost impossible. The H100 chip still costs about $2.60 an hour in rental fees, far from the $1 trigger. So, that leaves the stock market tests. From September 25 levels, Nvidia would need to tumble 48%, and the chip fund would need to slide 31%.

The problem is, these kinds of drops take months or years to develop. Even in July, the worst month for chip stocks since 2008, the chip fund only fell 29% from its peak and Nvidia dropped 19%. Over the past decade, both stock tests were triggered together just once, in 2022, and that came after nearly a year of steady declines.

Additionally, Nvidia's underlying business remains extremely strong. The company said on August 26 that quarterly sales through July surged 106% to $96.2 billion. It also guided for $108 billion in the current quarter, showing demand is still accelerating.

The bubble call from Capital Economics is one of the few arguments the "Yes" holders have up their sleeve. Yet even that firm expects any downturn to begin next year, not in 2026. Which is why we are buying "No" at 90 cents, targeting an 11.1% gain.