WASHINGTON, July 6 — The figure that matters: $150 billion. That is how much venture capital flowed into artificial intelligence startups in 2024, according to an internal Treasury Department report that warns the surge may be inflating a financial bubble. The bottom line: the Office of Financial Research, a unit within Treasury, completed the analysis in early 2025.
It found that venture funding for AI companies jumped 60% from 2023, even as many of those firms lack clear revenue models. The report draws a direct parallel to the dot-com bubble of 1997-2000, when the NASDAQ Composite rose 400% before crashing 78%.
Investors will note the Treasury report does not predict an imminent crash. But it urges caution as AI stock valuations outpace earnings growth. The report recommends enhanced regulatory oversight of AI-related financial products.
It also calls for closer monitoring of bank exposures to loans made to the AI sector. Treasury Secretary Janet Yellen has not publicly commented on the report.
Sources say the department is reviewing its findings. By the numbers, the scale of the capital flowing into AI is striking. The $150 billion figure represents a massive concentration of investor bets on technology that, for many companies, has yet to prove it can generate sustainable profits.
The report’s authors see echoes of the late 1990s, when enthusiasm for internet companies drove valuations to unsustainable heights. The comparison is sobering. During the dot-com era, the NASDAQ’s 400% climb was followed by a 78% collapse.
The Treasury report does not suggest history will repeat itself exactly, but it flags the pattern as one regulators should watch. The recommendations carry weight because they come from the Office of Financial Research, which was created after the 2008 financial crisis to spot systemic risks early.
The office’s mandate is to identify threats before they become crises. What to watch next: whether Treasury acts on the report’s recommendations. Enhanced oversight of AI financial products and closer scrutiny of bank lending to the sector would represent a significant shift in regulatory posture.
For now, the department is reviewing the findings, and investors are watching for any signal that Washington sees the AI boom as something that needs cooling.
