{"id":2998,"date":"2025-10-17T08:33:04","date_gmt":"2025-10-17T08:33:04","guid":{"rendered":"https:\/\/wallstreetendeavor.com\/?p=2998"},"modified":"2025-10-29T08:35:58","modified_gmt":"2025-10-29T08:35:58","slug":"why-the-ai-rally-might-be-too-hot-to-handle","status":"publish","type":"post","link":"https:\/\/wallstreetendeavor.com\/de\/technology\/why-the-ai-rally-might-be-too-hot-to-handle\/","title":{"rendered":"Why the AI Rally Might Be Too Hot to Handle"},"content":{"rendered":"

Earlier this month, Advanced Micro Devices (NASDAQ: AMD)<\/strong> shares soared after announcing a major deal with OpenAI, briefly adding nearly $100 billion to its market value.<\/p>\n\n\n\n

The agreement, which could lead to billions in future revenue, has been hailed by analysts as a defining moment for AMD\u2019s competitive position against Nvidia (NASDAQ: NVDA) in the race to dominate AI chip production.<\/p>\n\n\n\n

Benchmark analyst Cody Acree called the announcement \u201ca ringing endorsement\u201d of AMD\u2019s progress, boosting the firm\u2019s price target to $270.<\/p>\n\n\n\n

But while investors piled in, others warned that the rally, along with recent double-digit jumps in giants like Oracle (NYSE: ORCL),is showing signs of excess. Oracle\u2019s own AI-related surge last month added $255 billion to its market value in a single session<\/strong>, fueled by a $300 billion cloud partnership with OpenAI over five years.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Familiar Signs of Euphoria<\/h3>\n\n\n\n

These extraordinary moves have drawn comparisons to the late 1990s, when technology stocks inflated far beyond fundamentals before the dot-com bubble burst.<\/p>\n\n\n\n

\u201cIf any one of these deals falls through it has this domino effect downstream that I think is concerning,\u201d said Brian Mulberry of Zacks Investment Management, which oversees roughly $12 billion in assets. \u201cIt reminds me of what happened with telecom back in the mid-nineties.\u201d<\/p>\n\n\n\n

Adding to the unease is the concentration of today\u2019s market leadership. The top technology names now make up roughly 35% of the S&P 500, compared with less than 15% before the dot-com collapse.<\/p>\n\n\n\n

\u201cThe market is pricing these deals as if everyone who transacts with OpenAI will be a winner,\u201d said Michael O\u2019Rourke, chief market strategist at Jonestrading. \u201cOpenAI is a negative cash flow company and has nothing to lose by signing these deals. Investors should be more discerning.\u201d<\/p>\n\n\n\n

<\/div>\n\n\n\n

\u201cMore Explosive Than 1999\u201d<\/h3>\n\n\n\n

Hedge fund billionaire Paul Tudor Jones told CNBC this week that the setup \u201creminds him of the dot-com bubble,\u201d saying all the ingredients for a speculative blow-off are in place.<\/p>\n\n\n\n

\u201cHistory rhymes a lot,\u201d he said. \u201cI would think some version of it is going to happen again.\u201d<\/p>\n\n\n\n

Analysts are also pointing to what they describe as circular capital structures in these AI-linked partnerships, where companies use each other\u2019s products and money to drive growth narratives.<\/p>\n\n\n\n

Mulberry noted that such feedback loops can amplify valuations without corresponding increases in real productivity or profit.<\/p>\n\n\n\n

Ted Mortonson, a technology strategist at Baird, called the price action \u201cpart of the exuberance bundle.\u201d He added that seeing large companies gaining so much market value rapidly is \u201cnot good and normal.\u201d<\/p>\n\n\n\n

Between Innovation and Inflation
To be fair, the enthusiasm isn\u2019t entirely misplaced. AMD\u2019s deal with OpenAI does mark a significant milestone in the GPU market, signaling a genuine competitive challenge to Nvidia\u2019s dominance. The AI revolution is real, and companies at the center of it are poised for substantial long-term gains.<\/p>\n\n\n\n

Yet, as with every period of technological transformation, the question remains: how much of today\u2019s valuation reflects tomorrow\u2019s potential, and how much is simply momentum chasing momentum?<\/p>","protected":false},"excerpt":{"rendered":"

The latest surge in AI-linked stocks is dazzling investors but raising a the question: have markets learned anything from 1999?<\/p>","protected":false},"author":2,"featured_media":2999,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15,53,52,47,54,9,63],"tags":[66,68,69,72,33,70,30],"class_list":["post-2998","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-tech-general","category-tech-industry","category-software","category-tech-investments","category-technology","category-worthy-endeavors","tag-ai","tag-finance","tag-general","tag-industry","tag-investing","tag-north-america","tag-technology"],"acf":{"featured_video_oembed":"","featured_post_summary":"","post_source":""},"_links":{"self":[{"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/posts\/2998","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/comments?post=2998"}],"version-history":[{"count":3,"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/posts\/2998\/revisions"}],"predecessor-version":[{"id":3002,"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/posts\/2998\/revisions\/3002"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/media\/2999"}],"wp:attachment":[{"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/media?parent=2998"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/categories?post=2998"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wallstreetendeavor.com\/de\/wp-json\/wp\/v2\/tags?post=2998"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}