Is the AI Stock Boom About to Burst?

​Wall Street’s Growing Unease
The love affair with artificial intelligence stocks might be turning into an obsession — and Wall Street’s starting to worry it’s gone too far. After months of record highs and breakneck corporate spending, some of the market’s biggest names are warning that AI mania is looking more like a bubble than a revolution.

JPMorgan CEO Jamie Dimon cautioned that sky-high valuations could spell trouble, noting that “when asset prices are elevated, you have further to fall.” Investors, he added, seem “too comfortable” with risk at a time when credit spreads are stretched and optimism is overflowing.

Signs of Market Euphoria
Fresh data backs up the concern. A Bank of America survey found that an “AI equity bubble” is now considered the top global risk among major fund managers for the first time ever. Meanwhile, cash levels have plunged to just 3.8%, close to the threshold that typically signals peak investor greed.

At the same time, State Street’s Risk Appetite Index shows professional investors have been adding to riskier assets for five months straight. Analysts say that kind of confidence often shows up right before a correction. “Absent a big shock, it’s unlikely they’ll change their views soon,” said Nicholas Colas of DataTrek Research.

The AI Spending Frenzy
Even as warning lights flash, corporate America keeps doubling down on AI. Google just dropped $15 billion on a data center in India, Walmart partnered with OpenAI to expand its retail tools, and chipmakers like AMD, Nvidia, and Broadcom are signing multibillion-dollar deals to feed the AI boom.

But not everyone sees this as sustainable. Michael O’Rourke from JonesTrading says the numbers don’t add up — pointing to OpenAI’s $1.5 trillion infrastructure build-out against modest revenues. “That’s where investors should recognize there’s a disconnect,” he said.

Not Everyone’s Panicking
Still, some analysts say this isn’t dot-com 2.0 — at least not yet. Lale Akoner from eToro argues the market has entered a “priced-for-perfection” phase rather than full-blown mania. “Investors are pricing the story over the execution,” she said, adding that strong balance sheets give Big Tech more breathing room than the startups of 2000 ever had.

​Even so, the market’s faith in AI depends on one thing: earnings. Analysts expect double-digit growth for Nvidia, Microsoft, and Alphabet through 2026 — a high bar that leaves little room for disappointment. If those expectations crack, the so-called “AI revolution” might face its first real test.