Polymarket traders price 11% chance of AI bubble burst by year-end

Traders on the prediction market Polymarket have assigned an approximately 11% probability to an “AI bubble burst” occurring by December 31, 2026. The contract, which has seen cumulative transaction volumes between $2 million and $3 million, reflects growing investor anxiety regarding AI valuations.

The criteria for a market “burst” under this contract are stringent, requiring at least three severe conditions to occur within a single 90-day window. These triggers include Nvidia shares falling 50% from their all-time high, the SOXX semiconductor ETF dropping 40%, or bankruptcy declarations by major AI firms. This suggests traders are pricing in a systemic breakdown rather than routine market fluctuations.

Concerns regarding the sector have been echoed by prominent investors, such as Citadel’s Ken Griffin, who suggested AI is “almost certainly” in a bubble. Much of the scrutiny focuses on the massive capital expenditures required for AI infrastructure and the potential for correlated, herd-like trading behavior driven by automated AI systems, which can amplify market volatility during periods of shock.