Stock Market Bubble: One Signal Will Show Its Time to Sell AI Stocks

Core Insights - The AI boom has significantly impacted tech stocks, with companies investing billions into AI-related projects, but there are concerns about a potential "metaverse moment" that could signal trouble for investors [1][2][4] - A "metaverse moment" refers to a scenario where a major AI firm announces increased capital expenditures (capex) but experiences a drop in stock price, indicating a potential market correction [2] - The metaverse previously attracted substantial investment but ultimately led to significant losses for companies like Meta, raising parallels with the current AI investment landscape [3][4] Investment Trends - Major tech firms, including Amazon, Meta, Microsoft, and Google, are projected to spend up to $320 billion on AI infrastructure this year, reflecting the scale of investment in the sector [4] - The free cash flow of hyperscalers has declined recently, suggesting weakening balance sheets, reminiscent of trends observed in telecom stocks before the dot-com bubble burst [12] - Speculative stocks linked to the AI trade, such as those in quantum computing, rare earths, and nuclear energy, have experienced sell-offs, raising concerns about the sustainability of the AI investment boom [13][14] Market Performance - The tech-heavy Nasdaq 100 has risen by 135% over the past five years, while the Roundhill Magnificent Seven ETF, which tracks key AI companies, has increased by 172% since its inception, indicating significant gains driven by AI investments [14]