2025-11-21 AI Tech Valuation Concerns - AI bubble

A lot of the recent rally was driven by AI-related and high-growth tech stocks (e.g., Nvidia). Now, investors are getting more cautious about whether the earnings from that AI boom can justify the very high valuations.

There are growing worries about an “AI bubble” or over-exuberance. Market sentiment has flipped from “greed” to “fear”. Investors are more risk-averse; some are taking profits.

Volatility measures (like the VIX) have spiked, showing that traders are more nervous.

The VIX is around 26, which signals elevated market fear and rising risk. That suggests a higher likelihood of panic-selling. Now the question is: is this a compelling buying opportunity or a time to seek safety in other assets?

Valuation concerns
Investors are worried that many stocks — especially large tech companies — have very high valuations and may not deliver the growth to justify them.

For example:

• The S&P 500 fell below its 50-day moving average for the first time in a long while, which is a technical red flag.
• Analysts are pointing out that the “hype” (especially around AI-related names) may have gotten ahead of fundamentals.