Hugging Face co-founder and CEO Clem Delangue argues that we’re not in an AI bubble at all, but in an “LLM bubble” — one he believes may soon burst. Speaking at an Axios event on Tuesday, he said the debate over a potential bubble is today’s “trillion-dollar question,” but emphasized that AI’s broader future isn’t in jeopardy even if LLM valuations collapse.

 

Delangue believes the hype is concentrated specifically around large language models — the technology behind systems like ChatGPT and Gemini — and that this level of attention is unlikely to last.

 

“I think we’re in an LLM bubble, and I think the LLM bubble might be bursting next year,” he said. But LLMs, he noted, represent only a slice of AI. In fields like biology, chemistry, imaging, audio, and video, he believes we’re just getting started.

Part of the problem, he said, is the misconception that LLMs are the answer to every problem. In reality, he expects a shift toward smaller, more specialized models designed for specific tasks.

 

“All the attention, all the focus, all the money is going into the idea that you can build one giant model with massive compute that solves everything for everyone,” Delangue said. “The reality is that you’ll see a multiplicity of customized, specialized models emerging in the coming months and years.”

He pointed to something like a banking chatbot as an example: it doesn’t need to answer philosophical questions — just handle banking inquiries. A smaller, cheaper, faster model that can run on a company’s own infrastructure is often a better fit. That, he said, is the future of AI.

 

Delangue acknowledged that a bursting LLM bubble could affect Hugging Face, but said the AI sector is large and diversified enough that overvaluation in one corner won’t derail the entire field — or his company. Hugging Face, he noted, still has half of the $400 million it has raised sitting in the bank, a contrast to the heavy spending by many LLM-focused companies.

 

“In AI terms, that’s called profitability,” he joked. “Others aren’t spending hundreds of millions — they’re spending billions.”

By comparison, Hugging Face is prioritizing capital efficiency and long-term strategy. “A lot of people are rushing, maybe even panicking, and taking a very short-term approach,” Delangue said. “I’ve been in AI for 15 years and have seen the cycles. We’re learning from that and trying to build a long-term, sustainable, impactful company for the world.”