Why does that matter? Because everything that goes up must eventually come down, and it might take your money with it.
As investments in artificial intelligence continue to soar, some analysts are raising alarms about a looming bubble that could burst and trigger broader market declines. Others, however, say they’ve never been so sure that it is a growing opportunity.
So who is right? Well, on Wall Street, there’s a pick-your-flavor opinion for whatever it is you want to back, so we can’t determine that. But we can show you what each side is thinking.
Firstly, that the sector is overvalued. Analysts and investors and even company CEOs of AI giants have expressed concerns that current valuations of AI-related stocks may be disconnected from their underlying fundamentals.
The rapid rally in companies involved in AI hardware, software, and infrastructure—including chipmakers, cloud providers, and automation firms—has driven valuations to levels that many consider unsustainable.
Why does that matter? Because everything that goes up must eventually come down.
That means that recent market volatility and warnings from veteran investors suggest that a sudden reassessment of valuations could result in a significant downturn, similar to past technology and internet bubbles. The hype men
Secondly, that growth is why those valuations are worth it.
Despite recent concerns about overvaluation and a possible slowdown in AI-related growth, UBS analysts reaffirmed their positive outlook on the sector this week, buoyed by Nvidia’s hotly anticipated quarterly results.
In a note released after Nvidia reported earnings that exceeded expectations (but only just barely), UBS said that the core case for AI investment remains intact.
