Why Changpeng Zhao Said Most AI Firms Will Go Bust

Binance founder Changpeng Zhao (CZ) argued on Friday that most artificial intelligence companies will fail. His statement came as Anthropic approached a $1 trillion valuation and OpenAI moved closer to an initial public offering. The timing creates a sharp contrast between sector euphoria and one of crypto's most vocal skeptics.

The Valuation Disconnect Zhao Targets

Anthropic's near-$1 trillion valuation and OpenAI's IPO trajectory represent peak expectations for a sector that Zhao argues is overbuilt. His reasoning mirrors the dot-com bust logic: too many companies chasing similar use cases, with revenue concentrated among a few leaders. AI startups burn cash on compute and talent while many lack a clear path to profitability. If venture funding tightens, the weaker players have no cushion.

Zhao's track record gives the warning weight. He called Bitcoin frothy at $20,000 in 2017 and built Binance into the largest exchange by volume. His skepticism of AI mania signals that he sees a similar pattern of capital chasing narrative over fundamentals.

Capital Rotation Risk for Crypto Markets

The prediction has direct implications for crypto-native investors. If AI companies face a widespread bust, capital could rotate into blockchain infrastructure projects – particularly those focused on decentralized computing or data verification. Conversely, crypto platforms that integrate AI, such as trading bots and analytics suites, face counterparty risk if their AI providers collapse.