Is it going to pop?
It seems that every time I look at stocks in the Technology Sector, people are talking about the AI Bubble and when it will burst. They look at the CapEx spending especially in the hyperscalers and say that it will all come crashing down. But the big boys (Google, Amazon, Meta, Nvidia, etc.) can do it without hurting themselves too much. It’s kind of like buying a car. To spend 50K to buy a new car would really hurt me! But I don’t think that someone like Donald Trump would even notice that he spent it.
Anyone who remembers the dot-com era (and I do) remembers the pain as everyone and their brother tried to get in on this new “internet thing” and started diving deep into startups and new ventures. But after the crash, the internet still exists, and if you think about it, if you don’t have an internet presence, then you are going to suffer.
You can see the results of the worry in the volatility of the stock market. People have been pulling their money out of AI stocks and trying to find some safe haven. I’ve been doing the same thing. Well, not exactly. I haven’t pulled any of my money out of AI stocks. But I didn’t go in as big as others. I did buy too much Tech (in my view) but I am not over extended.
Did I buy some stocks that I shouldn’t have? Sure. But when I bought them, I did so because I could see something that I think will make them grow. Have some of them let me down? Yep. But I still believe that there is an opportunity there and things will change. Point in case, Big Bear AI. Yeah, I bought in on them. They are not doing as well as I hoped and the value has gone down. But I don’t want to sell because I believe in their products. I knew it was speculative when I bought it.
Because of all the hype and pomp and circumstance, there is a lot of crazy stuff happening. Nvidia has great sales, and great forward-looking guidance, yet the stock is struggling to take off. And everyone says that they are the bellwether stock for AI.
I do believe that there is an AI bubble and that it is growing. But I don’t think it will burst. It might fade out but I don’t see any huge crashes. I do see it being a rough ride with all the areas that it touches. With Utilities, and Materials especially. For myself, I’m going to continue just looking for companies that have products I understand and think will be beneficial to the public. Maybe in the AI world, but i doubt it.
