Economists are raising concerns about the state of the artificial intelligence market, with John Higgins from Capital Economics suggesting the AI stock bubble has already burst. He points to a decreased ratio of stock prices to earnings per share. Higgins is now more worried about a rare bubble forming in the actual earnings of tech companies, fearing that AI demand might not be as high as anticipated or that an economic downturn could significantly impact profits.
Adding to these concerns, Siddharth Jain of GQG Partners warns that the S&P 500 could face substantial losses if the AI investment trend collapses, noting that AI capital expenditures drove over half of US economic growth last year. Jain highlights issues like high market valuations, excessive AI infrastructure spending by hyperscalers, increasing debt for AI development, and practices such as Nvidia offering financing to customers for chip purchases.
Despite these warnings, several companies are reporting strong AI-driven growth. DigitalOcean saw its stock surge due to a 150% increase in AI-related revenue last year, with AI now contributing $120 million to its annual run-rate revenue. Similarly, cybersecurity firm SentinelOne reached $1 billion in revenue for fiscal 2026, driven by its AI-native security platform, even though its stock has declined over 32% in the past year. Over 50% of SentinelOne's Q4 licenses included its Purple AI.
Datavault AI Inc. also reported its first profitable quarter, with Q4 revenue hitting $33.8 million, a 3,650% year-over-year increase, and an operating profit of $4.2 million. In terms of partnerships and new offerings, Dassault Systèmes is collaborating with Nvidia to integrate advanced AI into its 3DEXPERIENCE industrial software, developing "Virtual Companions" for design and manufacturing. NetApp is also expanding its AI data infrastructure and cyber resilience ecosystem, including the Nvidia co-engineered NetApp AI Data Engine.
Meanwhile, Charter Communications is focusing on new AI-driven data products to create advertising revenue streams amidst subscriber losses. On the trading front, the Equlum App AI has launched as a new automated platform for Canadian traders, utilizing advanced AI and algorithms to analyze markets and execute trades automatically.
Key Takeaways
- Economist John Higgins believes the AI stock bubble has burst and warns of a rare earnings bubble forming in tech companies due to potentially lower AI demand or economic downturns.
- Fund manager Siddharth Jain cautions the S&P 500 faces major losses if the AI investment trend collapses, citing high valuations and Nvidia's practice of offering financing for chip purchases.
- DigitalOcean's stock surged after a 150% increase in AI-related revenue last year, with AI now contributing $120 million to its annual run-rate revenue.
- SentinelOne, a cybersecurity company, achieved $1 billion in revenue for fiscal 2026, driven by its AI-native security platform, despite a significant stock drop.
- Datavault AI Inc. reported its first profitable quarter, with Q4 revenue at $33.8 million (a 3,650% YoY increase) and an operating profit of $4.2 million.
- Dassault Systèmes is partnering with Nvidia to integrate advanced AI, including "Virtual Companions," into its 3DEXPERIENCE industrial software for design and manufacturing.
- NetApp is expanding its AI data infrastructure and cyber resilience ecosystem, featuring the Nvidia co-engineered NetApp AI Data Engine.
- Charter Communications is developing new privacy-safe, AI-driven data products to generate advertising revenue amidst subscriber losses.
- The Equlum App AI has launched as a new automated trading platform for Canadian traders, using AI and algorithms for market analysis and trade execution.
- Concerns exist about excessive spending on AI infrastructure by hyperscalers and increasing debt to fund AI development.
Economist warns AI stock bubble burst, but a rarer one is growing
John Higgins, chief markets economist at Capital Economics, believes the AI stock bubble has already burst. He notes that while stock prices once outpaced earnings, this ratio has now decreased. However, Higgins is concerned about a different kind of bubble forming in the actual earnings of tech companies. He suggests that AI demand might be lower than expected, or an economic downturn could impact these earnings. This potential bubble in earnings, rather than just stock prices, is considered rare.
AI stock bubble burst, but a rare earnings bubble is growing, says economist
Economist John Higgins states that the AI stock bubble has already burst, as seen in the decreased ratio of stock prices to earnings per share. He is more concerned about a rare bubble forming in the fundamental earnings of tech companies themselves. Higgins suggests that AI demand might not be as high as anticipated, or a weakening economy, possibly influenced by geopolitical events like the war in Iran, could significantly reduce tech company profits. This potential issue with earnings is what he views as a more unusual and concerning bubble.
Top fund manager warns S&P 500 faces major losses
Siddharth Jain, co-manager of the GQG Partners Global Quality Equity Fund, warns that the S&P 500 could experience significant losses if the AI investment trend collapses. He points out that over half of US economic growth last year came from AI capital expenditures. Jain highlights concerns about high market valuations, excessive spending on AI infrastructure by hyperscalers, increasing debt to fund AI development, and practices like Nvidia offering financing to customers to buy chips. His fund has shifted to a more defensive investment strategy.
Dassault Systèmes partners with NVIDIA for AI in industrial software
Dassault Systèmes is collaborating with NVIDIA and others to integrate advanced AI capabilities into its 3DEXPERIENCE industrial software. They are developing 'Virtual Companions,' which are autonomous AI agents designed to help with design, engineering, and manufacturing. These AI assistants aim to boost productivity, speed up innovation, and lower costs for customers in industries like automotive and aerospace. This move is part of Dassault Systèmes' strategy to use new technologies to stay competitive in the industrial software market.
Equlum App AI: Canada's new automated trading platform reviewed
The Equlum App AI is a new automated trading platform designed for Canadian traders, aiming to make trading accessible without requiring deep financial knowledge. It uses advanced AI and algorithms to analyze market data, find trading opportunities, and execute trades automatically. The platform connects to live market data, uses predictive modeling, and learns from its trades to improve over time. Key features include its AI-powered trading engine, automated execution, and a focus on the Canadian market.
DigitalOcean stock surges on strong AI growth
DigitalOcean, which provides cloud services to small and medium-sized businesses, has seen its stock price rise significantly due to a 150% surge in AI-related revenue last year. The company is building more data center infrastructure to meet demand and offers AI services at a lower cost than larger providers. DigitalOcean's revenue growth accelerated to 18% in 2025, with AI contributing $120 million to its annual run-rate revenue. Management forecasts continued strong growth in 2026 and 2027.
NetApp expands AI data infrastructure and cyber resilience
NetApp has announced new partnerships and product launches to enhance its AI-focused cyber resilience ecosystem. These include collaborations with Commvault and Elastio, new storage systems, and the NVIDIA co-engineered NetApp AI Data Engine. These efforts aim to provide integrated data infrastructure and ransomware recovery for AI, High-Performance Computing, and hybrid cloud workloads. NetApp's strategy focuses on translating AI and cloud demand into profitable data services while managing competition and the shift to hyperscalers.
SentinelOne stock undervalued despite AI growth and profitability
SentinelOne, a cybersecurity company, has reached $1 billion in revenue for fiscal 2026, with 22% year-over-year growth driven by its AI-native security platform. Despite this, its stock has fallen over 32% in the past year. The company is becoming operationally profitable, and its AI security offerings are gaining traction, with over 50% of licenses sold in Q4 including its Purple AI. The stock trades at a low price-to-sales multiple compared to its historical average, suggesting potential upside for investors.
Charter Communications bets on AI data and Multiview amid Cox deal
Charter Communications is focusing on AI-driven data products and a new Multiview feature for its Spectrum TV App as it faces subscriber losses. The company appointed John Lee to lead a new unit for privacy-safe, AI-driven data products. These initiatives aim to create new advertising revenue streams. However, these moves occur as Charter deals with significant video and internet subscriber losses and cost-cutting measures related to its pending acquisition of Cox Communications.
Datavault AI reports first profitable quarter and strong growth
Datavault AI Inc. announced its first profitable quarter and record revenue growth for fiscal 2025. In the fourth quarter, revenue reached $33.8 million, marking a 3,650% increase year over year. The company also reported an operating profit of $4.2 million. Datavault AI has set a growth target for 2026, positioning itself as a penny stock with significant potential.
Sources
- One AI bubble has already burst. The next one—a ‘rare’ kind—is still growing, economist warns
- One AI bubble has already burst. The next one—a ‘rare’ kind—is still growing, economist warns
- Manager of top 2% fund warns S&P 500 poised for 'material downside'
- Dassault Systèmes AI Push With NVIDIA Puts Focus On Undervalued Shares
- Equlum App AI Review 2026 – Canada’s Rising Star in Automated Trading Platform
- How Much Higher Can DigitalOcean Stock Go?
- How Investors May Respond To NetApp (NTAP) Expanding Its AI-Focused Cyber Resilience Ecosystem
- Wall Street Is Sleeping on This $13 Stock -- and That's Your Opportunity
- How Investors May Respond To Charter Communications (CHTR) Betting On AI Data And Multiview Amid Cox Deal
- How Datavault AI (DVLT) Reached Its First Profitable Quarter and Set a 2026 Growth Target
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