--- title: AI Stocks Are on a Tear — and Experts Say It’s Not a Bubble description: AI stocks like Nvidia are surging. But investing experts say we're likely not looking at a bubble similar to the dot-com boom. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true editors: - name: Mallika Mitra role: Contributing Editor url: https://money.com/author/mallika-mitra/ bio: Mallika Mitra is a contributing editor for Money, based in Chicago. She has covered investing and retirement for seven years and her work has appeared in CNBC, Bloomberg, Kiplinger, AARP, Barron’s, Bankrate, The Daily Upside, ETF.com, The Bond Buyer, PLANADVISER, PLANSPONSOR and Investopedia. education: Craig Newmark Graduate School of Journalism at CUNY Kalamazoo College at_money_since: 2020 articles: 395 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - CNBC - Bloomberg - Kiplinger - Barron's - Bankrate - WGN-TV - CBS News Radio - This Morning With Gordon Deal - Everyone's Talkin' Money social: - https://twitter.com/mitra_mallika - https://www.linkedin.com/in/mallika-mitra-4577a386/ published: '2023-06-21T19:45:18.000Z' modified: '2023-06-27T17:47:12.000Z' section: Economy and Politics tags: - News - stocks word_count: 709 canonical: https://money.com/are-ai-stocks-in-a-bubble/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Illustration of a robot throwing dollar bills in the air](https://img.money.com/2023/06/Investing-AI-Stocks-Gaing-Steam.jpg) The stock market is soaring this year, and much of those gains are thanks to the [excitement](https://money.com/make-money-online-with-ai-chatgpt/) surrounding artificial intelligence. Chipmaker Nvidia's stock is up more than 200% this year, and artificial intelligence (AI) software provider C3 AI's stock is up more than 250%. Stocks of other companies that are putting resources towards AI have jumped, too: Microsoft is up 40%, and Google parent Alphabet is up 37%. Those gains have helped push the [S&P 500 index](https://money.com/how-to-invest-in-sp500/), which is often used as a benchmark for the stock market as a whole, up about 14% in 2023. For more seasoned investors, these soaring tech stock prices may be reminiscent of the dot-com bubble of the early 2000s. In equities markets, bubbles happen when overvalued assets soar to unsustainable highs before the bubble "pops" and prices fall back down to Earth. Analysts at Bank of America recently categorized the rise in [AI stocks](https://money.com/investing-in-ai-stocks/) as a "baby bubble." Bubbles are "always started by easy money," they wrote, and "always ended by rate hikes," pointing out that [another rate hike from the Federal Reserve](https://money.com/federal-reserve-pause-interest-rate-hikes/) is certainly possible this year. But overall, many market watchers say AI stocks likely aren’t in a bubble headed for a pop. ## Build a portfolio through a unique investing experience ### SoFi® lets you invest in stocks, ETFs, and more with as little as $5. Share insights in a community and access a wealth of educational content. [Start Investing](https://money.com/pr/sbfd9907d3ba?ap_referrer=%2Fare-ai-stocks-in-a-bubble%2F) **INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA / SIPC.** ## Are AI stocks in a bubble? The analysts at Bank of America aren’t alone in their concern, and while there is no way to know for sure, many experts say investors likely don’t need to worry about the type of bubble that has disrupted the stock market in past decades. “We do not believe what we are seeing today is the equivalent of the tech bubble in the late 90s or in the leverage-driven nature of the market leading up to the \[financial crisis\],” says Kevin Philip, partner at Bel Air Investment Advisors. He notes that companies in today’s market have much stronger fundamentals than they did in either of those instances. "It's not a bubble," Chris Harvey, head of equity strategy at Wells Fargo Securities, recently [told CNBC](https://www.cnbc.com/video/2023/06/01/theres-real-opportunity-in-a-i-its-not-a-bubble-says-wells-fargos-chris-harvey.html). He argues that valuations and earnings expectations for AI today are more realistic than they were for early internet companies in the late 1990s, and that companies have immediate commercial uses for AI tech. ## Will AI stocks keep soaring? Bubble or no bubble, most experts agree that while artificial intelligence isn't going anywhere, it's still very early in the development of the technology. That means investors should expect some bumps along the way. “AI is a game changer,” says Liz Young, head of investment strategy at SoFi. “It's something that's going to change industries, but it's pretty early in the lifecycle… we just don't know which companies are going to be good at it and which ones are not.” In other words, the companies that are successful at implementing AI today might not be the same companies that are successful next year, or five years from now. “In the case of any emerging technology or innovation, stocks that benefit do not typically go up without pause,” Philip says. He anticipates a pullback at some point as investors’ overenthusiasm wanes. He adds, however, that certain major companies (think Microsoft or Nvidia) will have an advantage in the short-term because they have more resources than smaller companies. Other experts are urging investors to be cautious. When a [very small number of stocks](https://money.com/can-tech-stocks-keep-driving-the-market-rally/) (in this case, mega cap tech stocks) are leading a rally while the rest of the market underperforms, it can be a cause for concern. As the industry matures, Young says investors should expect “a few ups and downs,” especially in the short term. “The chances of going on an unbelievably violent roller coaster ride in these super high-valued tech names are higher” in the near-term, she says. Philip recommends that investors looking for AI exposure learn about the practical implications of the technology and how it might impact the economy. Other experts [recommend](https://money.com/best-strategy-invest-in-ai/) investing across a wide range of companies in the industry rather than just a handful. That way, you won’t lose out if today’s successful names aren’t as promising tomorrow. ## Time in the market beats timing the market ### The brokerage you choose matters. Try SoFi®, the investing platform helping people become better investors. See what makes us different. [Start Investing](https://money.com/pr/dc493b2a487b?ap_referrer=%2Fare-ai-stocks-in-a-bubble%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/are-ai-stocks-in-a-bubble/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Stock Market", "item": "https://money.com/stock-market/" }, { "@type": "ListItem", "position": 4, "name": "AI Stocks Are on a Tear — and Experts Say It’s Not a Bubble" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/are-ai-stocks-in-a-bubble/#webpage", "url": "https://money.com/are-ai-stocks-in-a-bubble/", "name": "AI Stocks Are on a Tear — and Experts Say It’s Not a Bubble", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-06-21T19:45:18.000Z", "mainEntity": { "@id": "https://money.com/are-ai-stocks-in-a-bubble/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/are-ai-stocks-in-a-bubble/#breadcrumb" }, "dateModified": "2023-06-27T17:47:12.000Z" }, { "@type": "NewsArticle", "headline": "AI Stocks Are on a Tear — and Experts Say It’s Not a Bubble", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/06/Investing-AI-Stocks-Gaing-Steam.jpg", "width": 2880, "height": 1920, "caption": "Investing-AI-Stocks-Gaing-Steam" } ], "author": [ { "@type": "Person", "name": "Sarah Hansen", "url": "https://money.com/author/sarah-hansen/", "@id": "https://money.com/author/sarah-hansen/#author", "description": "Sarah Hansen is a senior writer at Money covering all things personal finance. 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