AI Bubble Admission and Structural Market Risk: An Expert Assessment of the Web Summit 2025 Confessions

// Executive Summary: The Web Summit Confession and the End of the "Silence Period"

The November 12-14, 2025, Web Summit in Lisbon represents a critical inflection point in the current artificial intelligence (AI) valuation cycle. For the first time, warnings of an impending bubble transitioned decisively from external financial critics to operational leaders within the high-growth AI industry. This psychological shift—from external skepticism to insider admission—is historically correlated with the final, high-risk phase of a speculative cycle.

The consensus emerging from the CEO confessions points to three core structural risks undermining the current market environment:

• Irrational Valuation: The prevalence of "Vibe Revenue," a term coined during the Summit, highlights excessive private market valuations based on technological promise rather than scalable cash flows, characterized by median Series B revenue multiples exceeding 41x.¹
• Strategic Misalignment: Evidence suggests strategic disconnects at industry leader OpenAI, where public infrastructure roadmaps worth trillions are offset by leaked internal financial data demonstrating high, unsustainable inference cash burn.²
• Systemic Accounting Risk: Established cloud hyperscalers are identified as potentially masking capital intensity by employing aggressive depreciation accounting practices, which investor Michael Burry alleges could collectively inflate industry earnings by $176 billion through 2028.⁵

While the immediate financial bubble risks are acute, the underlying technology's utility remains transformative. This duality implies that the anticipated correction will be highly selective, resulting in a dramatic valuation collapse for unprofitable application layers funded by "vibe revenue," rather than a complete failure of the core AI technological paradigm.

// The Insider's View: CEO Admissions and the Definition of "Vibe Revenue"

The public discourse at Web Summit 2025 marked a definitive break from previous years, where bubble concerns were often deflected. The statements made by leaders of DeepL, Picsart, and Lyft provide a comprehensive internal assessment of the market's fragility.

2.1. DeepL's Financial Prudence and Positioning

Jarek Kutylowski, CEO of the German AI company DeepL, articulated his concerns clearly, stating: "I think these evaluations are overstated in some places, and I believe there are signs that a bubble is approaching."⁷ Kutylowski, who leads a European AI firm with a $2 billion valuation, speaks from a position of relative financial stability.⁹ He cautioned that businesses are still "struggling to adopt" the technology entirely.⁸

By publicly acknowledging the generalized industry frothiness, DeepL seeks to differentiate its stable business model from competitors built purely on speculative funding. This strategy aims to position DeepL as a "quality asset" prepared to navigate a market contraction.

2.2. Picsart and the Quantification of Hype: The "Vibe Revenue" Thesis

Hovhannes Avoyan, CEO of the consumer-focused editing suite Picsart, contributed a crucial term to the discussion: “Vibe Revenue.” Avoyan criticized the current funding environment, noting the proliferation of AI companies "with no revenue yet having very high valuations."⁸ He described this as the market valuing startups based on "only some noise and atmospheric revenue."⁷

The term "vibe revenue" defines funding rounds driven primarily by investor Fear of Missing Out (FOMO), compelling technical demonstrations, and intense media hype, rather than demonstrable, scalable cash flows. The valuation is based purely on market sentiment, divorced from established business metrics.⁷ The moment a term like this is coined and widely adopted, it signals that the market has developed a unified language for describing its own irrationality.

2.3. Lyft's Strategic Dissent and Insider Action

Lyft CEO David Risher presented a more nuanced view, acknowledging the existence of a financial bubble while simultaneously emphasizing the enduring value of AI's underlying infrastructure. Risher contended that the massive investment into "data centers and all the model creation will have a long life because it makes people's lives easier and better."⁷

However, the divergence between Risher's public warning and his private actions provides a critical analytical data point. SEC filings indicate that Risher purchased 5,926 shares of LYFT stock in September 2025, a transaction of $100,001.¹³ This insider buying confirms management confidence in Lyft's specific equity and its turnaround strategy, highlighted by strong Q3 2025 results.¹⁴ This behavior implies that the correction will be highly selective: profitable application companies leveraging AI (like Lyft) anticipate being insulated from the collapse of pure-play, zero-revenue AI model companies.

// Economic Architecture of Speculation: The "Vibe Revenue" Market Mechanics

3.1. Quantification of Zero-Revenue Companies and Valuations

The current AI funding cycle is characterized by a significant premium paid at every stage. Seed-stage AI companies command a median valuation of $17.9 million (a 42% premium), while Series A rounds have a median pre-money valuation of $51.9 million (20% larger than non-AI rounds).¹⁷

The valuation of these pre-revenue entities is often based on metrics like the pedigree of the founding team, aspirational Total Addressable Market (TAM) estimates, or the "cost to replicate" the model. High-profile examples include Cognition AI, which achieved a $4 billion valuation following a $196 million raise, and Inflection AI, which reached a similar valuation after raising over $1.5 billion.¹⁸ Investors are pricing these companies as if perfect execution and scaled adoption are already guaranteed.

3.2. Valuation Distortion: Multiples Analysis

The distortion is revealed in revenue multiples. Data from mid-2025 indicates that median Enterprise Value (EV) to Revenue multiples for private AI agent startups are non-linear, peaking sharply in the early stages. Seed rounds see multiples around 22.7x, escalating to 39.1x at Series A, and reaching a peak of approximately 41.0x at Series B.¹

This 41.0x multiple is profoundly elevated. Historically, only the fastest-growing SaaS leaders commanded 10x-20x multiples during peak boom cycles. A crucial warning sign is the subsequent compression at later stages; multiples fall to approximately 26.2x at Series C and 29.3x at Series D.¹ This sharp decline confirms the existence of a "diligence cliff," where the hype premium—the "vibe"—dissolves, and later-stage investors demand concrete proof of sustainable moats and operational efficiency.

Funding Stage	Median EV/Revenue Multiple	Assessment (Premium Cluster Focus)
Seed	~22.7x	Early technical promise, pre-product revenue assumptions.
Series A	~39.1x	Peak speculation on niche penetration and strong NRR potential.
Series B	~41.0x	Peak multiple, driven by anticipation of rapid enterprise adoption (The "Vibe" Peak).
Series C	~26.2x	Compression: Focus shifts from hype to measurable execution and unit economics.
Series E+	~31.7x	Rebound for proven platforms with demonstrable moats and scale.

Works Cited

1. AI Agents Valuation Multiples: Mid-2025 Update | Finro Financial Consulting, accessed November 14, 2025, https://www.finrofca.com/news/ai-agents-multiples-mid-year-2025↑
2. OpenAI Just Signed a $38B Cloud Deal. But the Real Story is What Satya Said About Microsoft's H100s Collecting Dust. | The Neuron, accessed November 14, 2025, https://www.theneuron.ai/explainer-articles/openai-just-signed-a-38b-cloud-deal-but-the-real-story-is-what-satya-said-about-microsofts-h100s-collecting-dust↑
3. OpenAI has reportedly spent $12 billion on inference with Microsoft: The Register, accessed November 14, 2025, https://www.theregister.com/2025/11/12/openai_spending_report/↑
4. Price the stack, not the story. OpenAI says it will finish | Bluechip on Binance Square, accessed November 14, 2025, https://www.binance.com/en/square/post/32226609016090↑
5. Michael Burry Warns of AI Stock Accounting: $176B Depreciation Risk - News and Statistics, accessed November 14, 2025, https://www.indexbox.io/blog/michael-burry-issues-warning-on-ai-stock-accounting-practices/↑
6. The Big Short: Is Michael Burry right about the AI trade? - Saxo, accessed November 14, 2025, https://www.home.saxo/content/articles/equities/big-short-12112025↑
7. 'Vibe revenue': AI companies admit they're worried about a bubble - Benzatine Infotech, accessed November 14, 2025, https://benzatine.com/news-room/tech-leaders-warn-of-potential-ai-bubble-amid-soaring-valuations↑
8. Warnings of an AI bubble are mounting! Following Wall Street, senior executives of relevant companies have also acknowledged, accessed November 14, 2025, https://news.futunn.com/en/post/64927153/warnings-of-an-ai-bubble-are-mounting-following-wall-street↑
9. Polish-rooted AI Translation Startup DeepL With a New $300M Investment at $2B Valuation, accessed November 14, 2025, https://therecursive.com/polish-rooted-ai-translation-startup-deepl-with-a-new-300m-investment-at-2b-valuation/↑
10. Dr. Jarek Kutylowski – TECH by Handelsblatt, accessed November 14, 2025, https://www.tech-europe.org/speaker/jarek-kutylowski↑
11. Web Summit Rio: Picsart announces new GenAI product aimed at solo entrepreneurs, accessed November 14, 2025, https://about.websummit.com/summary-service/picsart/↑
12. Picsart Is Tech's Newest Unicorn - And Adobe Should Be Afraid - Forbes Africa, accessed November 14, 2025, https://www.forbesafrica.com/daily-cover-story/2021/09/17/picsart-is-techs-newest-unicorn-and-adobe-should-be-afraid↑
13. Lyft CEO Risher buys $100k in shares - Investing.com, accessed November 14, 2025, https://www.investing.com/news/insider-trading-news/lyft-ceo-risher-buys-100k-in-shares-93CH-4227797↑
14. Lyft Reports Record Q3 2025 Financial Results, accessed November 14, 2025, https://investor.lyft.com/news-and-events/news/news-details/2025/Lyft-Reports-Record-Q3-2025-Financial-Results/default.aspx↑
15. 'Western tech dominance fading' at Lisbon's Web Summit, accessed November 14, 2025, https://www.thestar.com.my/tech/tech-news/2025/11/11/039western-tech-dominance-fading039-at-lisbon039s-web-summit↑