Here’s how much £10,000 invested in SpaceX and Nvidia shares could be worth in 12 months….

Last week was a good one for Nvidia (NASDAQ: NVDA) shares. They climbed 13.24% to close on Friday (7 August) at around $224.

Space Exploration Technologies Corporation, or SpaceX (NASDAQ: SPCX), did even better. It finished the week 26.65% higher at $133. That followed a sharp rally on Friday when the stock rocketed 15.83%.

This is a good example of why investors need to tune out the short-term noise and look to the long term because investor sentiment is shifting dramatically from day to day.

Why investors need to be cautious

I’ve read umpteen articles warning about the AI bubble, and how it’s going to bring global stock markets to their knees. The big fear is that AI hyperscalers are pouring hundreds of billions of dollars into infrastructure that they’ll never get back.

That looks frightening on days when the shares fall and everyone is down in the dumps. But it misses one point. There have been tech sell-offs before and the sector always roared back. Any investor who shunned Big Tech altogether has made one of the biggest losing bets in history.

That said, we do need to be cautious. The sums involved are huge, and the AI boom really could go either way.

Three reasons it could continue:

• AI demand is still surging and doesn’t look like peaking any time soon.

• Companies are generating rapidly rising revenues from AI services.

• When interest rates fall, that could make…