Is the AI Stock Boom a Bubble?
The stock market is making all-time highs — again. And I keep hearing the same question being asked just about everywhere I go. Not just from financial analysts on CNBC or market strategists I trust, but just today from the server at my favorite Mexican café. So is there too much hype in AI?
The real answer?
Yes—and no.
Let me explain why both can be true at the same time.
AI Might Change Everything. That Doesn’t Mean Every Stock Will.
Artificial intelligence is the next big technological leap. It’s real. It’s transformative. And it’s not going away. Things are accelerating quickly, and not all of it feels sustainable. Valuations of many top AI‑related stocks are “expensive,” says The Motley Fool: “Not surprisingly, many of the top AI names are now trading at expensive valuations.” (I do like to follow Motley Fool).
And a podcast I heard recently included a great interview with an AI stock analyst who said: “It’s only 10:30 PM at the AI party. There’s still a lot of night left.” And his remark really made me think. I agree. Sticking with his metaphor, what he didn’t say was that on the way to midnight, don’t be surprised if a few neighbors complain. Maybe the cops even show up and tell everyone to keep it down.
In other words…Stock prices don’t move up in a straight line. Global artificial intelligence spending is projected to increase by 60% year‑over‑year in 2025, reaching approximately $360 billion. And AI—just like every boom cycle before it will be tested.
What Will Test This Market? The Usual Suspects.
This time around, the pressure points are already visible:
Earnings that can’t keep up with sky-high valuations
Over-investment in the AI space
Regulatory headwinds that haven’t even begun in earnest
One analyst at Jefferies warns the market faces a “massive over‑investment bust” as tech firms move quickly into large‑scale AI capex. Some companies that look like winners today will crash. Others—less flashy, more disciplined—will quietly build the future.
The testing is already starting. And if you’ve lived through dot-com or the 2008 credit crisis, the early signs probably feel familiar.
So, Is There a Bubble?
Yes. In parts of the market, clearly.
That doesn’t mean AI is overhyped. But it does mean the market might be dancing faster than the music.
Which brings us to the bigger question…
How Do You Invest Accordingly– What Should You Do?
This is not about timing the market. It’s about protecting what you’ve built—and positioning yourself to benefit if and when the next real wave comes.
If you’re investing for retirement or managing a nest egg:
Don’t chase trends. You may already be exposed to AI stocks through ETFs and mutual funds. Know what you own.
Diversify. Concentrated bets—especially in a hype-driven sector—can backfire when you least expect it.
Stay focused on goals. A well-built plan isn’t about outsmarting the market. It’s about outlasting it.
And if you don’t know whether your portfolio is caught up in the excitement? That’s worth a second opinion.
Not from someone trying to sell you the next AI stock.
But from someone who actually works for you.
That’s what fee-only fiduciary advisors do. And that’s why I created Wealthramp.com, to connect people with truly independent advice they can trust.
The bottom line? Yes, if some of this is a bubble, just make sure you’re investing with eyes wide open.