Iāve heard many people think the AI bubble is fit for bursting, and the market will tumble with it, but opposing attitudes are saying we have a few years yet.
I would love to hear your thoughts! 
I think it is far from bursting at an overall level but there will likely be volatility along the way.
AI still has a lot of opportunity to grow and develop. Key question for me is which companies wil benefit.
Without a doubt there will be individual stocks who are in a bubble, and others who are skyrocketing but their earnings potential justifies it.
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This is crucial. AIās undoubtedly the future but it doesnāt necessarily follow that AI companies will have a viable business model and make money.
Green energyās a good example. A broad ETF like INRG has more performed poorly for the past decade despite the growth of renewables.
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Michael Burry is everyoneās favourite in the movie ābig shortā But there are so many gems there uttered by seemingly insignificant characters.
In the scene āoffice confrontationā Lawrence fields objects to Burry saying āno one can see a bubble, thatās what makes it a bubbleā this is fundamentally true by the definition of bubble. Yes there are companies where valuations are so off itās difficult to even compute. However, there are others benefiting from the gold rush by selling shovels like NVDA, AMD, AVGO, ASML etc. Their valuations are also very expensive. If you cover the names and just look at numbers there are other ācrowd favouriteā companies that are twice as expensive (despite being obvious Iām not gonna name names here, I donāt wanna get pitchforked 
)
At the beginning of 2023 my brother asked me if he should buy NVDA, I said no: It is too expensive. In 20/20 hindsight, I was wrong. But thinking that heās my brother and his investment decisions effect my niece and nephew I still think I gave the right advice at the time. (Disclaimer I hold huge amounts of NVDA and AMD but my entry for NVDA is Ā£5 and AMD is lower than 2Ā£)
Another line from that same āoffice confrontationā scene, Burry says āIām early but I am not wrongā the unnamed sidekick character replies āitās the same thingā And again he is exactly right. Prof. Patrick Boyle has a youtube video on biggest short selling failures in history where most of the short sellers were right but their timing was off and ended up being a disaster for them. One of the biggest example of this was ā.com bubbleā late 90s early 2000s are full of graveyards of hedge funds shorting and āobvious bubbleā
@TInvest 's reply above is probably the TLDR for my long rambling, and his two take aways are right:
(PS: Iāve told this Big Short anecdotes so many times, it feels like dejavu posting them here. Apologies if I posted them under another post here as well 
)
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I would add that things like the holdings of say INRG was in a bubble as well, but now has potentially over corrected.
One problem with ETFs is that you canāt close them. You keep accepting new money and have to go out to the market to buy. People see the performance and āwant a bitā of the action as money follows money. Things keep going up, and you get it.
AI is the buzz word right now, mainly because people have seen what it can potentially do. A lot of that is now priced in, possibly more. Whatās not priced in is companies that are scratching the surface of how it can help them and their customers.
The markets are forward pricing. Hence why the U.K. market is a lot cheaper than the US equivalent in general, investors donāt like the unknown.
NVIDIA is trading at a PE of around 70. Take another well known chip manufacturer, Intel and thatās 34, TSMC which could arguably be better in terms of its protective moat is 27.
Iām not saying NVIDIA will fall, but I agree with the previous post itās not a buy for me.
It may or may not fall, but things tend to revert back to the norm over time, more so when they outperform more than 70%, the difficulty is predicting the timings to short, hence I donāt.
I sometimes invest in āthemesā, Private Equity funds were on a rediculous discount to BAV last October, and I wasnāt expecting them to recover quite so quickly (+100% return < 6 months), the next one I think might be clean energy again. It just needs a push.
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Iām gonno sidetrack the conversation a bit but Iāve been shorting Intel since Feb 2024, itās been very lucrative so far, and I donāt think It is over.
theyāve 10s of thousands of faulty 13x and 14x CPUs returning from corporate partners and vendors. So far they either have no explanation for a failure rate of 25% (or they do have an explanation but itās so embarrassing that they chose not to)
My humble opinion is even if they can keep this silent without spooking shareholders, all these returns will come to the balance sheets on next earnings.
edit: If you have not heard whatās wrong this time, Wendell from level one (who works with the corporate clients) and GN has a few videos about the failure rates and what it could be.
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Intel is down 25% pre-marketā¦
I may retire today 
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