Artificial intelligence may be the most powerful force reshaping modern industry — but some analysts warn it’s also inflating an AI bubble that could burst as fast as it grew. Despite political turmoil and a government shutdown, tech giants continue to pour billions into OpenAI Inc. and other generative AI ventures, chasing innovation at any cost.

Meanwhile, the tech world is navigating a volatile intersection of politics and technology. California’s new AI safety law, Apple Inc.’s compliance with federal app restrictions and the White House’s renewed push on cryptocurrency all signal how tightly government influence now binds to innovation cycles. The question is whether the AI boom can withstand the political and financial pressures closing in.

“[In] the AI era, the technology, the operation model and the business model and the pricing models are going to completely change,” said theCUBE Research Chief Analyst Dave Vellante (pictured, right). “We may be entering the era where every company is a software company … where that knowledge … tribal knowledge, it’s actually in the system, and it’s autodidactic. This is not going to happen overnight; this is going to take the better part of a decade to play out.”

On the latest episode of theCUBE Pod, Vellante and Executive Analyst John Furrier (left) discussed this intersection between politics and tech, as well as the state of the AI market. They delved into whether or not the AI bubble is going to pop, the battle of AI models and the potential for AI-native apps to disrupt traditional software-as-a-service applications.

When will the AI bubble pop?

The big question hanging over the current AI market is whether or not it will follow the trajectory of the dot.com boom. When the AI bubble does pop, will it cause what Furrier describes as a “nuclear winter” or just let out some of the air.

“The startups are active and the enterprise is opening open,” Furrier said. “But still, it’s not full throttle yet. If the IPO window opens up and continues into 2026 and the enterprise starts getting the groove swing, you’re going to see AI companies go public in ’26, certainly the big names might, then it’s going to put a lot of pressure on, say, the Databricks of the world.”

Big tech is investing billions to fuel the AI boom, building massive data centers in Texas and across the West. Capital expenditures are soaring — Meta Platforms Inc., for example, recently poured $14 billion on into CoreWeave Inc. Nvidia Corp. plans to invest up to $100 billion in partnership with OpenAI, a risky bet given OpenAI has yet to turn a profit, Vellante warned.

“The difference between this and dot-com was that dot-com, everybody knows, was built on debt,” he said. “This has been built on hyperscaler CapEx. But now, you’re starting to see the neoclouds build up a lot of debt, you’re seeing that circular reference. I think we are entering a bubble, and I think the bubble will burst, but God knows when. When people least expect it.”

If AI companies can do inference and training at the edge, that could potentially pay long-term dividends and strengthen those businesses when the AI bubble ends, according to Furrier. In addition, neoclouds such as CoreWeave and Lambda Inc. could disrupt the current status quo and see long-term success if they play their cards right.

“All the CapEx investment going into the neoclouds and all the infrastructure, does that investment cross over to intelligent edge AI?” Furrier asked. “If that develops, then all those computer vision applications, automotive applications, healthcare applications, life sciences discoveries will kick in. That’s real value.”

The rise of AI-native apps

The AI market could see a showdown between AI-native apps and the legacy SaaS players. After a recent MIT report showed that 95% of AI initiatives fail, experts are looking for which AI development strategy is going to prove the fastest and strongest.

“New companies that come out of the woodworks, that are AI native, that have radically better revenue per person … are going to emerge and blow away previous expectations,” Vellante said. “It’s going to start to disrupt, and that’s where it’s going to get interesting. That’s where the pain comes … the growth in new is never big enough to offset the decline in the old.”

There are two ways to get ahead in the AI race, according to Furrier: fast GPUs and a large data moat. Current SaaS applications are adapting AI to their existing technology, while AI-native applications are built from the ground-up with AI in mind. Pre-existing SaaS companies potentially have the advantage of a proprietary data moat and larger capital, while AI-native apps can move faster.

“Pre-existing SaaS apps that are retrofitted with AI, like SAP, for instance. They’re … infusing AI in,” Furrier said. “And you’ve got these developers who today are building AI-native, which is simply completely built around first principles of the models. AI-native is a legit trend, just like SaaS was a legit trend.”

AI models battle it out, plus upcoming theCUBE events

Several new models were released this month. Anthropic PBC debuted Claude Sonnet 4.5, describing it as the world’s best coding model, and OpenAI made the second version of its video generator model, Sora, available. Which model is the best choice? Time will tell.

“This could make or break companies,” Furrier said. “There’s a lot of pressure on chief AI officers right now, and every company’s got one. It’s the hottest persona in the enterprise and large-scale providers.”

The major hyperscalers — Amazon.com Inc., Google LLC and Microsoft Corp. — are also battling it out for AI supremacy. But the winner could be … all three. Vellante sees a future where the big trio — and potentially, Alibaba Group Holding Ltd. — run the AI market, even with competition from neoclouds.

“I think all three cloud players are going to win in the AI era,” he said. “I don’t think they’ll get completely disrupted. I think they’ve got a strong foothold in the market and I think that … they’ve shown that a triopoly is very viable.”

In other news, theCUBE’s coverage momentum is ramping up coast to coast — from Palo Alto to New York — as teams dive into enterprise tech events, studio productions and major interviews. Upcoming highlights include appearances by Michael Dell, IBM’s TechXchange, Dreamforce and a special theCUBE NYSE Wired event spotlighting women in semiconductors, according to Furrier.

Watch the full podcast below to find out why these industry pros were mentioned:

Michael Dell, chairman and CEO of Dell Technologies
Jensen Huang, founder and CEO of Nvidia
Donald Trump, 45th and 47th president of the United States of America
Scott G. McNealy, American businessman and former CEO of Sun Microsystem
Rob Hof, editor-in-chief at SiliconANGLE Media
Michael Saylor, founder and executive chairman at MicroStrategy
Jeff Bezos, chairman of Amazon
Sanjay Poonen, president and CEO of Cohesity
Tom Lee, investor, entrepreneur
Gavin Newsom, governor of California
David Floyer, analyst emeritus at theCUBE Research
George Gilbert, principal analyst at theCUBE Research
Tim Cook, CEO of Apple
Sam Altman, co-founder and CEO of OpenAI
Andy Jassy, president and CEO at Amazon
Andy Grove, former COO and president at Intel
Matt Garman, CEO of AWS
Gemma Allen, theCUBE host
Brian J. Baumann, founder of NYSE Wired and director of capital markets, technology at NYSE

Here’s the full episode of this week’s theCUBE Pod:

Don’t miss out on the latest episodes of “theCUBE Pod.” Join us by subscribing to our RSS feed. You can also listen to us on Apple Podcasts or on Spotify. And for those who prefer to watch, check out our YouTube playlist. Tune in now, and be part of the ongoing conversation.

Photo: SiliconANGLE