It is easy to argue that AI-exposed investments are now in a bubble. Stocks have risen so sharply that some have shown signs of speculative excess. Market veterans have compared the current investment cycle to the railway boom in the United States in the second half of the 19th century, when a technology that genuinely transformed the economy nevertheless produced disastrous investment outcomes for many investors.

Chip providers, such as Nvidia and Advanced Micro Devices, have one major advantage over the railway companies of the late 19th century: they have exceptionally strong balance sheets and are already generating substantial earnings and cash flow. This provides important context for Nvidia’s record-sized increase to its share buyback authorisation. The remaining amount authorised for share repurchases currently sits at $235 billion. For context, only around 80–90 publicly listed companies worldwide have market capitalisations greater than $235 billion.

Another example of a hugely successful AI story is one of the world’s leading manufacturers of memory chips, Micron. A trailing price-to-earnings ratio of around 13 times and an expected forward multiple of around five times are valuations rarely seen for a business with such strong expected growth and a robust balance sheet.

So to answer the question while there might be signs of weakness/fatigue in the AI trade, the main players still have plenty of capital to deploy and growth trajectories that few companies in the world’s history have every enjoyed.