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Are We In An AI Bubble?

Are we in an AI bubble? That’s the question everyone on Wall Street and Main Street is asking as we witness the meteoric rise of companies at the center of the Artificial Intelligence revolution. You don’t have to look any further than the sky high valuations of AI chip powerhouses like Nvidia, which is currently valued at an eye-watering $4.44 trillion dollars, and AMD, whose stock has rallied more than 83% in 2025. Then you have the cloud computing giants like Oracle and Alphabet’s Google, which are racing to build out their infrastructure to handle the massive demand for AI. Oracle, with a market cap around $625.21 billion dollars, has seen its stock jump more than 171% over the last three years. Even hyperscalers like Microsoft, Meta, and Amazon are spending billions of dollars in capital expenditure on data centers, and their investors are expecting huge future returns on those investments. Google is undertaking an aggressive $85 billion dollars capital expenditure plan for 2025 for its AI and Cloud infrastructure buildout, giving its Google Cloud business an annual revenue run rate now exceeding $50 billion dollars. Now I know you’re all just dying to know what I think, but you’ll have to stick around to the end of the video to find out, and I promise it’s not what you think. But before we go any further, if you haven’t already, smash that Like button, and do me a solid and subscribe to my channel to help YouTube’s algorithm like us more. If you do, the algorithm gods have promised to reward The Business Behind The News with even greater growth than the recent AI stock market rally! Now back to our analysis. One reason to think we’re in an AI bubble is by looking at the staggering gains in the stock market this year, which some compare to the good ’ol days of the dot-com bubble of the late 90s and early 2000s when the S&P 500 rose by approximately 170%, and the Nasdaq Composite Index surged by approximately 572%. Today the S&P 500 has seen a total return of 18.22% in 2025, following a massive 25.02% total return in 2024. The Nasdaq Composite has also shown incredible momentum, posting a 29.6% total return in 2024 and continuing its surge in 2025 up around 21.93%. Even the broader Dow Jones Industrial Average is up around 12.72% in 2025, and it’s not even weighted with nearly as many tech companies as the Nasdaq Composite. Specific companies at the core of the AI boom are driving these market gains. For instance, Nvidia’s stock has surged over 33.5% in 2025 alone, while AMD’s stock has posted gains of approximately 83.0% for the year. Even established giants have seen huge moves, with Microsoft’s stock rising by nearly 14.8% and IBM’s stock up an impressive 39.9% in 2025. Meta is up around 8.5% this year, and Oracle has seen its stock rise around 32.2% in 2025. Meanwhile, the valuations of some companies seem to defy traditional metrics. The trailing Price to Earnings ratio for AMD is hovering around 125 times, which is an elevated valuation to say the least. The sheer speed of the market rally and the astronomical valuations for companies that have no earnings yet certainly bring back memories of the dot-com era when companies with no business plan or revenue were valued at billions of dollars. This time around, even profitable leaders like Nvidia carry a heavy valuation burden, trading at a price-to-sales ratio around 23 times sales. One big key difference between now and the dot-com bubble is that this time around, the companies that are doing massive spending on AI data centers and infrastructure are not unprofitable startups. They are global giants that are making billions of dollars in revenue and profit. Nvidia’s fiscal year 2025 total revenue was a record $130.5 billion dollars, representing a massive 114.2% year-over-year increase, with its data center revenue alone soaring over $30.8 billion dollars in the third quarter of fiscal 2025. 00:00 Introduction 00:30 Are we in an AI bubble? 00:48 Nvidia's market cap is close to $4.44 trillion dollars 02:09 Why do people think we're in an AI bubble? 05:00 These valuations for pre-revenue AI companies are insane 08:10 Want to know what I think about the AI bubble? 08:30 Why is Wall Street's AI bull market rally different than the dot-com bubble? 08:50 Is OpenAI the next Netscape? #ai #aibubble #nvidia #amd #igoogle #meta #microsoft #aistocks #datacenter #aidatacenter #business #businessnews