Are AI stocks in a bubble?

The Valuation Question

With AI-related stocks hitting record valuations in early 2026, investors debate whether we're in a bubble or the early stages of a transformational supercycle.

The Bull Case

Record CapEx spending: Companies are investing unprecedented amounts in AI infrastructure and development.

Earnings growth: AI companies posting rapid revenue expansion and margin improvements.

JPMorgan's view: "The biggest risk is not having exposure to this transformational technology."

The Bear Case

Valuations are at historic highs. Cathie Wood warns P/E multiples need to compress from current levels. Some worry AI investments represent a bubble close to popping, similar to the dot-com era. Goldman Sachs notes returns will need to come from earnings growth, not multiple expansion.