With Nvidia about to report, the question isn’t just about growth, it’s whether
the AI boom is due for a second act or a sharp deflation.
The AI Bubble: Not a Wild Theory
We’ve heard the word “bubble” directed at artificial intelligence (AI) more and more lately. Huge
investments have stakeholders looking over their shoulders as vast sums are spent
on infrastructure while many companies are struggling to show a pathway to
clear returns.
Meanwhile, hedge funds are already making bets. For example, legendary
investor Michael Burry reportedly shorted
$1.2 billion of Nvidia and Palantir Technologies stock late last quarter.
Added to that, billionaire Peter Thiel has dumped his entire Nvidia
holding, according to newly released regulatory filings, as anxiety over an
AI-driven tech bubble continues to swirl. Fresh 13F disclosures from Thiel
Macro LLC reveal that the fund exited all 537,742 Nvidia shares it owned in the
July to September period. The stake had previously made up about 40% of the
fund’s entire portfolio.
NVIDIA $NVDA reports earnings this week, I don’t mean to be dramatic but if they don’t beat and raise we are ALL FINISHED… 😱 pic.twitter.com/5ntcyT7mtp
— Dividend Dude (@dividenddude) November 16, 2025
So yes: “AI bubble” is not just clickbait any more—it’s how some
investors are literally positioning.
Nvidia’s Role: Why its Earnings Matter So Much
Enter Nvidia. Wall Street is treating the company’s upcoming quarterly
results (after market close on November 19) as more than just a single blip, it’s
a litmus test for the broader AI boom. There’s a good chance that Nvidia’s
report could well tell us how the market will move in the very near future.
Why? Because Nvidia is the biggest beneficiary of the infrastructure
build-out: the chips, servers and software that power generative AI,
large-scale models and data centers. Investors are watching ahead of its
earnings, and according
to analysts, firms expect it to report sales of about $56.8 billion versus
$54.6 billion consensus. So far, so good for bubble watchers.
WATCH: Nvidia, the world’s first $5 trillion semiconductor company, will report earnings results next week, with investors watching for AI forecasts that could sway global tech markets and ease bubble concerns. Here is the top business news for next week pic.twitter.com/YidJoitx53
— Reuters Business (@ReutersBiz) November 15, 2025
In other words: if Nvidia delivers strongly, you could see the hype
cycle re-accelerate; if not, you might see the bubble pop.
What the Optimistic Case Looks Like
Imagine that Nvidia reports better-than-expected numbers, perhaps
raises forward guidance, convinces investors that AI infrastructure spending is
not only real but accelerating. There’s a good chance of this happening, 40
out of 47 analysists quizzed by Yahoo called Nvidia a “strong buy”, with
only 1 calling it a “strong sell”. Why the positivity? Q2 2026 revenue growth
of 56% year-on-year and earnings growth of 61%.
Plus, many analysts are bullish: per Yahoo Finance, Nvidia shares are
already priced for big growth and some analysts have raised targets
accordingly.
In that scenario: hype returns, valuations push higher, and the
“bubble” becomes less of a scary word and more of a bullish label.
The Flip Side
But the flip side is very real. As Investopedia warned, investors are
worried that tech firms might be spending too fast on AI for returns that may
come much later, or possibly not at all. Interviews
with a series of AI CEOs indicate that they’re aware of the issue, but
optimistic.
If Nvidia misses expectations, or gives conservative guidance, two
things could happen: (1) A big chunk of the AI infrastructure narrative gets
questioned. (2) Broad AI-related valuations, already steep, come under
pressure. Given how many stocks ride the same wave, any pullback could be
sharp.
Also worth noting: speculative momentum is baked in here. Nvidia is
already pushing expectations and setting incredible numbers. It has been for a
while. With this comes high expectations. When you’re expected to execute
perfection, anything else can feel like failure. We’ve seen this before, but then
Nvidia continues to grow. Just see our reporting from
October of last year.
The overall sentiment appears to be: You don’t need Nvidia to prove the
AI boom exists, but you do need it to show the boom is sustainable. Without
that, the narrative weakens.
What Are Investors Watching For?
Here are key metrics and signals:
·
Revenue for the quarter
meeting or beating expectations.
·
Guidance for the next
quarter or year that points to continued growth in data-centre, AI-server
business.
·
Margin trends and cost
pressures: infrastructure is expensive and margins matter.
·
Signs of scaling beyond the
big cloud players, if the build-out is too concentrated it becomes a risk.
·
Any commentary on “power
wall” or infrastructure bottlenecks; will investments outrun the revenue curve?
Bubble Revival or Cautionary Flag?
If Nvidia hits and raises, we may see a fresh wave of AI hype in one
swoop. AI valuations could get a second wind, chip stocks surge and investors
shift back into “growth at any price” mode.
But if Nvidia guides cautiously, misses, or signals slower momentum,
the “bubble” label could go from metaphor to warning. AI-related stocks may
tumble, valuations compress, and investors rethink the timing of the mega
investments.
Given the stakes, November 19 is less “earnings day” and more “market
direction decision point.” Prepare accordingly.
This article was written by Louis Parks at www.financemagnates.com.
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