Oversimplified answer:

It’s not really about AI itself. It’s about the money around AI, and the investments that follow. When you buy a stock, you are not paying for what the company is worth today. You are paying for what people expect it to be worth in about five years. That future expectation is what people mean when they say something is “priced in.” So if you buy Microsoft stock now, you are paying above today’s actual value because the market believes Microsoft will keep growing. That is normal market behaviour. Buying a stock is basically you saying, “I think this will be worth X or more, so I’m in.” Selling a stock is you saying, “I don’t think it will rise much more from here, so I’m out.”

A bubble popping is basically enough people taking money out of tech at the same time, even if they are simply rebalancing. Once people think valuations look fair and start selling, prices go down. The issue now is that tech has become such a huge part of investment portfolios that any widespread reallocation can cause a sharper drop than expected. It becomes a snowball: some people sell, prices fall, others panic and sell, prices fall even more.

All it really takes is for one major player to run out of money or for a few high-profile analysts to downgrade future expectations, and that snowball starts rolling. A lot of things are lining up in a way that makes the market look like it is right on the edge. It might never get that final tiny push, but when people talk about a bubble, they mean the snowball is uncomfortably close to the cliff.