By Ryan Vlastelica and Carmen Reinicke
Publication Date: 2025-11-23 14:00:00
(Bloomberg) — Wall Street thought blowout earnings from Nvidia Corp (NVDA). would calm investors’ nerves about a bubble forming in artificial intelligence stocks. They didn’t.
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So where does the AI trade stand now? It depends who you ask.
On one side you have the skeptics. They’re concerned about soaring market valuations as investors chase growth in a small collection of stocks tied to the AI boom. They see the hundreds of billions of dollars these companies are spending to stay in the race as unsustainable, particularly as they start to take on debt in order to keep up. In addition, the circular nature of these financing arrangements creates a potential systemic risk in which one company’s weakness can bring down the entire trade.
The other side are the optimists, who see the recent pullback in AI-related shares as a healthy correction on the way to further growth. To them, the mega-cap technology firms at the heart of the AI trade — Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Meta Platforms Inc (META). and Alphabet Inc. (GOOG, GOOGL) — are going to keep spending to develop their offerings, with no signs of slowing anytime soon. Plus, with the industry’s strong demand and a regulatory environment that’s considered accommodating for growth, they view the AI investment cycle as just in the early innings.
“There is certainly a division,” said Dec Mullarkey, managing director at SLC Management. “We…