Some analysts are sounding the alarm about a bubble in AI stocks. Several retail investors are buying into that idea as well. That accounts for the ongoing volatility in the technology sector.
The most recent catalyst for this speculation is the growing belief that a circular economy is emerging among AI stocks. The thinking goes that one company is buying another company’s products (e.g., GPUs) and funding that purchase with money it receives from yet another company.
It’s an intriguing theory with ramifications for the AI trade. But is it true?
Goldman Sachs (NYSE: GS), for one, doesn't believe there's a bubble in AI stocks.
Instead, as noted by Quartz.com, "The financial services company, in a note to investors this week, said that it believes the AI story is just getting started – and the investments that seem huge today will be dwarfed by the benefits AI will deliver."
In the long term, the investment bank predicts that artificial intelligence (AI) adoption could add $20 trillion to the U.S. economy. AI, according to Goldman Sachs, is already delivering those gains in productivity when deployed right.
Goldman Sachs isn’t alone in their analysis. Mary Callahan Erdoes, CEO at JPMorgan Asset and Wealth Management, dispelled worries over valuation, saying that AI is presenting opportunities not fully appreciated or understood yet," as noted by CNBC. "AI itself is not a bubble. That's a crazy concept… We are on the precipice of a major, major revolution in a way that companies operate," Erdoes added.
"So, if you say to yourself, is AI in a bubble, I feel you have to get very granular on how you're going to answer that, because in the U.S., we're starting to gain traction, but we're nowhere near the ability to have the stuff all to the bottom line."
It's also why analysts are still bullish on the leading AI stocks in the tech sector, such as:
AI Stocks to Buy: NVIDIA
Analysts at Bank of America just reiterated a buy rating on Nvidia Corp. (NASDAQ: NVDA). The firm says NVDA is well-positioned for healthcare and artificial intelligence. "Nvidia, a leader in accelerated computing, has broadened its reach into high-compute healthcare workloads and continues to engage in partnerships on the application side," they said, as quoted by CNBC.
NVDA stock is up 39% year-to-date as of this writing. The company reports earnings after the market closes on November 19, which is likely to give the market more guidance about the pace of spending on AI infrastructure.
AI Stocks to Buy: Taiwan Semiconductor
Analysts at Barclays just raised their price target on Taiwan Semiconductor (NYSE: TSM) to $275 with an overweight rating. That was after TSM raised its 2025 revenue guidance to mid-30% growth and reiterated plans to invest $42 billion in capital expenditures by year's end. Taiwan Semiconductor also posted a 39.1% jump in third-quarter profits.
Taiwan Semiconductor is a pick-and-shovel play on AI infrastructure. The foundry is a critical manufacturing partner for virtually every significant AI chipmaker. Geopolitical risks overhang the stock and weigh on the thesis. But so far, investors are brushing those concerns aside.
TSM stock is up 43% year-to-date as of this writing. Analysts give the stock a consensus price target of $371.67, which would be a gain of 31% from its price on November 17.
AI Stocks to Buy: Advanced Micro Devices
Bank of America also reiterated its buy rating on Advanced Micro Devices (NASDAQ: AMD) with a $300 price target. "We rate AMD Buy. It serves a multi-hundred billion addressable market opportunity in PC, server, high-end gaming, deep-learning and related markets where AMD has less than 30% value share currently," as noted by CNBC.
As of this writing, AMD stock is up over 102% in 2025 including a 37% gain in just the last three months. The company crushed its earnings report in early November, with forward guidance that pays off the idea that it’s successfully making inroads to capture market share from NVIDIA.
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