Despite pouring a record-breaking amount of cash into US-based AI startups in the first half of 2025, some of the tech industry’s most bullish backers are now starting to change their tune or even exit the field altogether — and the money isn’t necessarily coming with them.
With the first half of the financial year now behind us, CNBC reports that venture capitalists — who’ve dumped $104.3 billion into AI companies this year so far, almost as much as all of 2024 combined — are now frequently exiting through mergers and acquisitions with much lower returns on their bets.
While two-thirds of US venture funding now goes to AI — up from 49 percent last year — there have also been 281 VC-backed exits, meaning the point at which an early-investor cashes out of a company, so far in 2025.
Exits aren’t bad news for the AI industry per se, as long as the money going out of AI matches or exceeds the money going in. But as CNBC notes, there’s still a lot more money going in than going out, with just $36 billion reported in cashouts across 2025.
While some of these exits turn into lucrative IPOs — like the public listing of AI-powered insurance company Slide, now valued at $2.3 billion — the vast majority of them are said to be “lower-value acquisitions.”
And despite little concrete evidence that all these venture capitalists are ever going to get their money back, the blank checks to AI companies are only ramping up.
Leading the charge are some eye-watering AI investments for the biggest and buzziest companies in the space. OpenAI raised $40 billion in March, for example, the largest deal of its kind ever recorded, while Scale AI received $14.3 billion from Meta in June (right before laying off 14 percent of its staff.)
While headline figures dazzle, venture capital overall is comatose, CBNC notes, with industries like fintech, cloud computing and crypto seeing huge drops in venture capital funding this year.
It also comes as financial analysts warn that an “AI bubble” of epic proportions may be getting ready to burst. Recently, Apollo Global Management chief economist Torsten Slok warned that the economic conditions surrounding AI are beginning to look far worse than the infamous dot-com crash of the late 1990s.
Slok noted that “the top 10 companies in the S&P 500 today are more overvalued than they were in the 1990s,” as top tech stocks continue to inflate thanks to heavy investments in AI.
And some major players are already giving AI the cold shoulder. Back in February, for example, Microsoft’s CEO Satya Nadella made a major U-turn when he announced the cancellation of some massive data center leases, signaling an embrace of the “wait and see” approach from a company that had previously poured billions into AI.
That just might be the harsh reality behind the hype: a booming sector on paper, but one haunted by a growing feeling of dread.
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