Is the "AI Bubble" a Ghost Story? Here's What the Numbers Say... VIEW IN BROWSER During the Halloween season, people love to tell ghost stories – strange sightings, things that go bump in the night, rumors of something lurking just out of view. These stories are meant to keep you on edge, looking over your shoulder. And lately, that’s exactly what Wall Street has been doing. Investors are whispering about a new ghost haunting the markets – the ghost of the AI bubble. You can’t open Bloomberg, The New York Times or The Atlantic without hearing warnings that AI stocks have gone too far, that valuations are stretched, that this rally feels just like the dot-com days. Some even argue that the productivity gains from AI haven’t materialized yet. Now, I’ll admit that supernatural things could be real. We might look back someday and say this was a bubble ready to pop. However, just as there’s no proof ghosts are real, I don’t see any real evidence of a bubble right now, either. As you know, I’m a numbers guy. And the proof is in the numbers. They show real profits, real innovation and real demand driving this boom, not ghosts. No group captures that better than the Magnificent Seven – the market’s biggest names, each betting billions on AI to power their next phase of growth. And with five of them stepping into the spotlight this week, we’re getting a clear look at who’s chasing the future… and who’s still haunted by doubt. So, in today’s Market 360, let’s look at the numbers and see which companies are proving the AI boom is built on substance – and which might be smoke and mirrors. We’ll also examine what my proprietary Stock Grader (subscription required) has to say about these names. Then, I’ll show you how to stay positioned for the next phase of the AI Revolution. | Recommended Link | | | | Nvidia gave investors a chance to make more than 150 times their money with its AI chips known as graphic processing units. Legendary investor Louis Navellier believes this new invention could be even more revolutionary and mint a new wave of millionaires. Click here to get the details. |  | | Alphabet After the close on Wednesday, Alphabet Inc. (GOOGL) reported a strong quarter that easily topped expectations. The company reported $2.87 earnings per share on $102.4 billion in revenue, surpassing Wall Street’s forecasts for $2.27 and $99.9 billion, respectively. That’s a 35% jump in earnings and a 16% increase in revenue from a year ago. Not to mention its first-ever $100 billion quarter. Alphabet’s advertising business remains rock solid, with Search revenue climbing to $56.6 billion and YouTube ads reaching $10.3 billion, both beating estimates. CEO Sundar Pichai credited much of that momentum to the integration of AI features like Gemini – the company’s flagship model that powers everything from Search to Cloud services. The real breakout, though, was Google Cloud, which surged 34% to $15.2 billion, lifting its segment operating income to $3.6 billion – nearly double last year’s results. Meanwhile, the division’s backlog has grown to a staggering $155 billion. Management also raised its 2025 capital spending forecast to between $91 billion and $93 billion. This reflects the massive investment it’s making to expand AI and data center capacity. Bottom line: Alphabet proved that its AI investments are translating into real, measurable growth, which is also why it earns a “B” (Strong) in Stock Grader. Meta Platforms Meta Platforms, Inc. (META) also reported on Wednesday, delivering strong top-line growth but headline earnings that were skewed by a one-time tax charge, which sent the stock tumbling. The company generated $51.2 billion in revenue, up 26% from a year ago, while earnings came in at $1.05 per share. Excluding the non-cash $15.9 billion tax hit, however, Meta’s adjusted earnings would have been $7.25 per share, representing a 20% increase from a year ago. The Family of Apps business continues to do the heavy lifting, with $50.8 billion in revenue supported by a 14% jump in ad impressions. Diving deeper, the big headline was spending. Meta has raised its 2025 capital expenditures forecast to $70-72 billion and signaled that 2026 spending will climb even higher as it expands AI data center capacity and hires more engineering talent. CEO Mark Zuckerberg called this “an exciting period in our history,” pointing to the company’s advances in AI glasses and its new Meta Superintelligence Labs. So, Meta’s core ad business remains unstoppable, and its heavy AI investments show a company positioning itself for the next decade of growth. But I should add that it currently gets a “C” (neutral) in Stock Grader, which means you may want to hold off for now. Microsoft The last of the group to report on Wednesday was Microsoft Corporation (MSFT). The company reported revenue of $77.7 billion, up 18% from last year and ahead of the $75.5 billion analysts expected. Earnings jumped 12% year over year to $3.72 per share, topping estimates for $3.68 per share. The cloud business was, once again, the star. Microsoft Cloud revenue jumped 26% to $49.1 billion. Intelligent Cloud rose 28% year over year to $30.9 billion, besting expectations for $30.2 billion. Azure and other cloud services jumped 40%, marking another quarter of accelerating momentum and demonstrating how rapidly AI demand is scaling across industries. And Microsoft isn’t holding back. Capital spending soared 74% year over year to $34.9 billion, with nearly half of that going toward high-end chips to fuel Azure’s expansion. As CEO Satya Nadella put it, Microsoft is building a “planet-scale cloud and AI factory.” I should also note that Microsoft is deepening its partnership with OpenAI. Just this past Tuesday, the two reached a new agreement where Microsoft holds a 27% stake in OpenAI’s for-profit arm, and OpenAI has committed $250 billion in Azure spending over the next several years. Between 40% Azure growth, record cloud bookings and relentless AI investment, Microsoft’s quarter made one thing clear: This isn’t a company reacting to the AI boom… it’s the one powering it. That’s also why it earns a “B” (Strong) in Stock Grader. Amazon Amazon.com, Inc. (AMZN) reported after the bell on Thursday and beat expectations. Earnings increased 36% year-over-year to $1.95 per share. Analysts were expecting $1.58 per share. Revenue rose 13% to $180.2 billion, topping estimates for $177.8 billion. Amazon Web Services (AWS) was the star. Cloud revenue rose 20% to $33 billion and segment operating income reached $11.4 billion. Management highlighted accelerating AI demand, noting its custom AI chip, Trainium2, is now a multibillion-dollar business that grew 150% from last quarter. Additionally, “Project Rainier” went live, which is Amazon’s new large-scale AI compute cluster. It contains roughly 500,000 Trainium2 chips. Company-wide operating income came in at $17.4 billion, essentially flat year over year due to an FTC settlement and severance tied to planned job cuts. Advertising continued to scale, with revenue climbing 24% year-over-year to $17.7 billion. The company’s AI-powered tools like Rufus and Help Me Decide are helping to drive that growth by improving product discovery and engagement across its retail platforms. Following this report, Amazon raised its fourth-quarter sales guidance to a range of $206 billion to $213 billion. In short, Wall Street was delighted with the results, sending the stock up by 10% on Friday. Amazon currently rates a “C” (Neutral) in Stock Grader. Apple Apple Inc. (AAPL) rounds out the Big Tech earnings week. The company reported earnings of $1.85 per share on $102.5 billion in revenue, topping Wall Street forecasts for $1.77 and $102.2 billion, respectively. That’s 13% earnings growth and an 8% increase in sales year over year – marking a record September quarter and capping off a record fiscal year with $416 billion in annual revenue. iPhone sales came in just shy of expectations at $49 billion, but CEO Tim Cook said demand for the new iPhone 17 lineup remains strong, with supply “constrained by high demand.” Cook added that the company expects the December quarter to be its “best ever” for both iPhone and total revenue. Apple’s Services segment – its second-largest business – climbed to a record $28.7 billion, above the $28.2 billion expected. The category continues to be a powerful profit driver, helped by growth in subscriptions, App Store revenue and Apple Pay usage. Mac and iPad sales also modestly beat forecasts, at $8.7 billion and $7 billion, respectively. Greater China revenue was a weak spot, at $14.5 billion versus the $16.4 billion analysts projected. But Cook emphasized that he expects a return to growth next quarter as iPhone 17 availability expands. All told, this was another steady quarter from one of the world’s most valuable companies. Margins are holding up, services are accelerating and early iPhone 17 momentum points to a strong finish for 2025. Shares of AAPL briefly hit an all-time high on Friday before pulling back a bit. The stock currently earns a “C” (Neutral) from Stock Grader. Beyond the Ghost Stories... What’s clear to me at this point is that all of this talk about an “AI bubble” is a lot like a good ghost story. It plays on real fears that we have, but they aren’t based in reality. That’s why it’s so important to stay grounded in facts, not fear. Because while this market may be a bit frothy, the reality is the strongest stocks aren’t built on hype – they’re built on earnings, innovation and demand. And right now, no company embodies that better than another Magnificent Seven stock: NVIDIA Corporation (NVDA). Its chips aren’t just fueling growth, they’re powering nearly every major AI model, data center and innovation on the planet. That’s why, even after a historic run, I still consider NVIDIA the stock of the decade. Because as the AI industry expands, it becomes increasingly dominant. In fact, its next breakthrough could be even more transformative – a leap so large that Bank of America says it may be “the biggest revolution for humanity since discovering fire.” Early tests suggest this new technology could be 1,000 times more powerful than today’s AI, igniting what I call The NVIDIA Shock of 2025. I just recorded an urgent briefing explaining how this shift could reshape entire industries, and the small group of companies I believe could soar alongside NVIDIA as this next revolution unfolds. If you missed the 150X boom from NVIDIA’s AI chips, this could be your second chance… and it may be even bigger. Click here to watch my urgent briefing now. Sincerely, | .png)
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