What Bubble The Analysts And Investors Making The Bull Case For Ai

Chipmaker Nvidia posted yet another blockbuster earnings report this month. The stock fell anyway, as many investors worry that the market is in the middle of an about-to-burst AI bubble. But for AI’s biggest believers, the report was just another sign that the industry’s train isn’t running out of steam anytime soon. “Fears of an AI Bubble are way overstated in our view,” Wedbush analyst Dan Ives wrote in a note last week. The Nvidia earnings report “is another validation point for the AI Revolution and (in) our view we are in the Top of the 3rd inning of this AI game .” The possibility of an AI bubble has loomed over the tech industry and Wall Street for years, but worries have ramped up sharply this year.

Massive AI infrastructure spending, a string of circular deals among a few key big tech companies and seemingly endless rhetoric about AI’s world-changing potential – with little profit to show for it – have... Nvidia CEO Jensen Huang delivers a keynote address at the Consumer Electronics Show (CES) in Las Vegas in January. Patrick T. Fallon/AFP via Getty Images hide caption Perhaps nobody embodies artificial intelligence mania quite like Jensen Huang, the chief executive of chip behemoth Nvidia, which has seen its value spike 300% in the last two years. A frothy time for Huang, to be sure, which makes it all the more understandable why his first statement to investors on a recent earnings call was an attempt to deflate bubble fears.

"There's been a lot of talk about an AI bubble," he told shareholders. "From our vantage point, we see something very different." Take in the AI bubble discourse and something becomes clear: Those who have the most to gain from artificial intelligence spending never slowing are proclaiming that critics who fret about an over-hyped investment frenzy... It is tech's biggest question, and there is a wide range of takes on every side. With artificial intelligence-driven spending leading to record deals and valuations, seemingly everyone is weighing in on the AI boom — and potential bust. Economic bubbles happen with a rapid rise in market values and asset prices in a specific area, often fueled by speculation, followed by a crash during which money is quickly taken out.

More than 1,300 AI startups now have valuations of over $100 million, with 498 AI "unicorns," or companies with valuations of $1 billion or more, according to CB Insights. Megacaps like Amazon, Meta, and Microsoft are spending billions on data center buildouts, and blockbuster deals are being announced left and right from OpenAI, Nvidia and others. The stock market has been running high. Too high, some analysts say. A number of Wall Street observers warn the stock market may have entered “bubble” territory. It’s an analogy to the overhyped markets of 2008 and 1999, which crashed when the bubbles burst.

Lately, there's talk of an AI bubble, a runup in the prices of tech stocks fueled by enthusiasm over artificial intelligence. Those fears partly explain why stocks have faltered in the second half of November, despite a string of strong earnings reports. When investors fear stocks might sink, their thoughts might turn to pulling money from the market and parking it in cash: money market funds, Treasury bills, even a plain old savings account. Seesawing stock prices fuel their ennui. “A lot of my clients have been sort of panic-calling this week,” said Monica Dwyer, a certified financial planner in West Chester, Ohio, speaking to USA TODAY in October. Markets are soaring.

Valuations are swelling. And enthusiasm for all things artificial intelligence is pumping hundreds of billions of dollars into the most transformational technology of the modern era. “AI isn’t just another theme; it’s the culmination of decades of evolution in computing,” Jon Markman, a Forbes contributor who analyzes tech stocks, writes. “Every layer of the stack, from power generation to semiconductors to enterprise software, is being rebuilt for an AI-first world. That’s a structural transformation.” Is this growth sustainable or another bubble about to burst, potentially wiping out $40 trillion of value from the Nasdaq and washing away upstart AI companies faster than they sprouted?

Forbes expert contributors have been on AI-bubble watch for months, tracking reliable signs of stability while warning about soft spots that echo the dot-com crash a generation ago. “I see three scenarios,” Forbes senior markets contributor Peter Cohan says. “GenAI keeps booming, there’s a soft-landing in which valuations decline somewhat, and the OpenAI bankruptcy scenario, which brings it all down abruptly should the company be unable to raise more capital to fund its... Michael Nagle/Bloomberg via Getty Images Silicon Valley is pouring concrete and capital like it’s building a new interstate. Data-center blueprints are swallowing whole ZIP codes, utilities are rewriting load forecasts, and megacaps are spraying cash at chips the way old industries sprayed it at oil rigs.

The scale feels historic — and that’s exactly what makes investors twitchy. Today’s market feels both inevitable and unnervingly fragile. Every quarter brings a bigger data-center pledge, a nastier power bill, and a fresh set of claims about a productivity windfall just around the bend. And yet, in boardrooms and research calls, a conversation is happening: Is this the supercycle that re-rates capitalism — or is it a bubble assembling itself in real time? One camp says today’s run is expensive but earned — grounded in earnings power, cash-funded capex, and use cases that will eventually catch revenue up to rhetoric. Hyperscalers are spending at a clip that would have sounded deranged three years ago; chipmakers are booked out years; entire utilities are being redesigned to feed “AI factories.” The other camp hears dot-com echoes:...

Read more: Is the AI boom actually a bubble? Here’s everything you need to know Investors have parted with unprecedented sums of money to help AI fulfill its lofty promise. But no one really knows how it will all pay off. For almost as long as the artificial intelligence boom has been in full swing, there have been warnings of a speculative bubble that could rival the dot-com craze of the late 1990s that ended... Tech firms are spending hundreds of billions of dollars on advanced chips and data centers, not just to keep pace with a surge in the use of chatbots such as ChatGPT, Gemini and Claude,...

The final bill may run into the trillions. The financing is coming from venture capital, debt and, lately, some more unconventional circular financing arrangements that have raised eyebrows on Wall Street. The U.S. economy has come to increasingly depend on the AI boom, despite risks. Fears of an artificial intelligence bubble have rattled the stock market in recent weeks and set off concern among critics about a wider risk to the U.S. economy.

A surge of AI spending accounted for roughly two-thirds of gross domestic product growth over the first half of 2025, JPMorgan Asset Management found, outpacing the contribution made by hundreds of millions of U.S. consumers. Many of the nation’s largest companies have poured funds into the chips and data centers necessary to operate AI. A central question looms over the fate of the technology and the trillions of dollars being spent to develop it: Will AI deliver the type of profits that could turn the product into a... Proponents say a lag between the buildout of AI infrastructure and an onrush of gains is to be expected, pointing to a similar lull after the introduction of other watershed technologies, such as the... The widespread adoption of products like OpenAI’s ChatGPT has revealed a massive potential customer base, they add, noting AI firms have prioritized product development over profits.

Profesor Agregado de Economia, Universitat de Barcelona Sergi Basco does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment. Universitat de Barcelona provides funding as a founding partner of The Conversation ES. Universitat de Barcelona provides funding as a member of The Conversation EUROPE. Booms and busts are a recurring feature of modern economics, but when an asset’s value becomes overinflated, a boom quickly becomes a bubble.

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