Should you invest in AI stocks right now?
What's the story
Investment in artificial intelligence (AI) stocks has been the talk of the town in 2025. The trend is largely driven by heavy investments in cloud and AI infrastructure, and their increasing adoption across sectors. Major players like NVIDIA, Palantir Technologies, Alphabet, AMD), Microsoft, Broadcom and Cloudflare are at the center of this investment frenzy. However, concerns over potential AI valuation bubbles and market volatility have also emerged.
Market perspective
Analysts view AI stocks as long-term growth opportunities
Despite the concerns, many analysts still see core AI stocks as long-term growth opportunities. They believe these technologies have an unprecedented economic impact. However, some market strategists are cautious about a potential correction in AI stock prices. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said that an 'AI bubble burst' is the biggest concern in today's markets due to its global implications, given the high global exposure to US equities.
Valuation analysis
AI stock valuations not in bubble territory
Dr. Vijayakumar argued that while AI stocks are highly valued, they're not in bubble territory like the tech bubble of the late 1990s. He suggested a correction in AI stock prices without triggering a burst could be likely. Viram Shah, Founder and CEO of Vested Finance, cited NVIDIA as an example of high but not excessively inflated valuations with its forward price-to-earnings ratio (P/E) around 30-35 times.
Profitability contrast
Today's profitable AI companies differ from dot-com era
Unlike the cash-burning companies of the dot-com era, today's 'Magnificent Seven' are highly profitable and self-funding their capital expenditures. Subho Moulik, Founder & CEO of Appreciate, said these firms have generated massive operating earnings in Q3 2025. However, some pure-play AI firms do show significant overvaluation that may be considered bubble-like.
Market growth
AI infrastructure market projected to grow rapidly
The AI infrastructure market is expected to grow at a rapid annual rate of 18%, nearing $200 billion. However, energy consumption is an important indicator for AI growth and a potential constraint on its advancement. Moulik noted NVIDIA's impressive financial performance with $57 billion revenue (+62% YoY) and $31.9 billion net income (+65%), along with projected chip orders worth $500 billion for 2026.
Strategy
Investors are betting on AI adoption
Experts believe investors are currently betting on the extent of AI adoption. Shah said over 85% of global firms use AI in at least one business function, and this number is only going up. He added that chipmakers such as AMD, cloud platforms like Microsoft and Amazon, and software companies such as Adobe and ServiceNow are all integrating AI into their core offerings.
Investment advice
Balancing AI investments with caution
Dr. Vijayakumar advised against investing in AI stocks right now, suggesting waiting for corrections that make valuations more attractive. However, Shah took a balanced view, saying while AI will create long-term winners, not every AI-labeled share will justify its price. He stressed the importance of selective exposure to companies with real earnings and strong cash flows in the face of growing regulatory scrutiny over data and model risks.