Singapore Financial Regulator Warns AI Companies Are Overvalued

The Monetary Authority of Singapore (MAS) has highlighted concerns over the inflated valuations of technology and artificial intelligence companies. In its annual Financial Stability Review released Wednesday, the regulator stated that equity markets are showing "relatively stretched valuations concentrated in the technology and AI sectors."

According to the MAS, much of the recent growth in global equity markets has been fueled by investments tied to AI, leaving many investors heavily exposed to the sector. The regulator also noted that some large technology firms were relying on opaque financing structures that could obscure leverage and amplify risks.

“Some Big Tech firms (primarily hyperscalers) have also turned to the use of novel and potentially circular private financing arrangements to fund their expansions,” the MAS stated. These include special purpose vehicles, private credit structures, and novel accounting methods that could increase funding dependencies.

The AI industry has experienced exponential growth, with valuations of both private and public companies soaring. As an example, OpenAI, the creator of ChatGPT, recently reached a $500 billion valuation and is reportedly targeting $1 trillion ahead of a potential IPO in 2026. Meanwhile, Anthropic’s valuation has nearly tripled since March, skyrocketing from $60 billion to $170 billion.

The current AI investment frenzy has drawn comparisons to the dot-com bubble. Regulators and economists have warned that the soaring valuations may be driven more by hype than by real gains in productivity. Jordi Alexander, CEO of Selini Capital, commented that while AI draws significant investment, "game-altering productivity gains from AI are still in the distant horizon." He emphasized that if revenue projections for major AI companies fail to materialize, financial exposure will ensue.

Nirav Murthy, co-founder and co-CEO of Camp Network, also expressed concerns, stating that valuations have outpaced fundamentals. He explained that while growth might appear inevitable due to "capital intensity, circular deal structures, and opaque accounting," companies need to focus on achieving sustainable unit economics to maintain momentum. He noted that cooling investor sentiment could first affect long-duration equities and private credit linked to AI ventures.

Despite the potential risks, Murthy acknowledged that parts of the AI value chain—such as chipmakers and major platforms—continue to be profitable. However, he warned that unresolved intellectual property disputes could create long-term challenges for the industry.

“Models trained on questionable datasets, rights disputes kicked down the road, and legal risk being treated as a line item” are key issues, he noted. He argued that for AI companies to achieve sustainable profits, they must build on rights-clean, licensed, and provenance-verified data as core infrastructure.