Lately, big tech cheerleaders, including Meta Platforms’ (NASDAQ:META) Mark Zuckerberg, Amazon’s (NASDAQ:AMZN) Jeff Bezos and OpenAI’s CEO Sam Altman, have warned we are in an AI bubble, with stock market valuations, heavy speculation and market exuberance beginning to mirror those of the dot-com era that eventually led to the famous stock market crash 25 years ago. Meta has announced plans to spend over $100 billion on AI and infrastructure in the coming three years; Apple plans to invest more than $500 billion in the U.S. over the next four years, including AI and data-center development, while Amazon is devoting roughly $70 billion to data centers and related infrastructure this year. As the New York Times recently noted, a handful of AI companies have accounted for most of the U.S. market’s 2025 gains. Some Wall Street traders are betting that AI valuations have overshot reality: Michael Burry previously revealed a $1.1-billion short position against Nvidia (NASDAQ:NVDA) and Palantir (NASDAQ:PLTR), reflecting his view that AI stock valuations were becoming stretched.
On the other hand, another section of Wall Street remains as bullish as ever on AI. To wit, Goldman Sachs and its wealthy clients consider AI one of the biggest investment opportunities of the current century. “We did have a conversation about markets and whether or not we think we’re in a bubble,” Brittany Boals Moeller, region head of Goldman Sachs’ San Francisco PWM division, told Fortune. “We do not think we’re in a bubble, and we pay very close attention to that. Will there be some winners and losers from AI? Absolutely. There will definitely be some places where valuations are overblown, and time will tell where those spaces are. So it’s smart for clients to be diligent about how they’re investing in AI.”
To be fair, there’s real money backing the AI boom as opposed to the Dot-com boom. Nvidia is currently valued at about 33 times forward earnings, a fraction of Cisco’s (NASDAQ:CSCO) PE ratio of 200 prior to the crash. Interestingly, CSCO still trades roughly 10% below its 2000 valuation peak. A recent McKinsey study found that AI use in the corporate world could drive $4.4 trillion in productivity growth.
Goldman Sachs and its clients are closely watching AI’s implications on energy use, healthcare, and personal productivity. Previously, we reported that the proliferation of AI data centers is a major factor behind rising U.S. energy bills. After years of relatively stable prices, U.S. electricity costs have climbed sharply, amplifying financial stress for millions of consumers already coping with inflation. U.S. electricity prices have surged 36% since 2021, averaging annual increases of about 7%—triple the 12% rise seen from 2009 to 2020. Residential power prices are expected to continue climbing, with the EIA projecting an average of 17.7 cents per kilowatt-hour by 2026, up from 16 cents in 2024.
According to the Electric Power Research Institute, data centers could consume up to 9% of total U.S. electricity generation by 2030, up from around 1.5% today, driven by the rapid adoption of power-intensive technologies such as generative AI.
America’s reliance on gas-fired generation has made it more exposed to rising fuel costs. Natural gas provides about 40% of total U.S. electricity output. Gas prices have been climbing, with Henry Hub futures up nearly 60% over the past year to $4.33 per million British thermal units (MMBtu). The EIA projects that Henry Hub spot prices will average $4.90/MMBtu in 2026, up from $4.00/MMBtu in 2025, as robust LNG export demand combines with modest domestic production growth. U.S. LNG export capacity is expected to grow roughly 75% by 2030, from about 17 billion cubic feet per day (Bcf/d) now to 30 Bcf/d from sanctioned projects alone.
Previously, we highlighted several companies positioned to benefit from the AI-driven power build-out, including Vertiv Holdings Co. (NASDAQ:VRT), Cameco Corporation (NYSE:CCJ), GE Vernova (NYSE:GEV), Quanta Services Inc. (NYSE:PWR), and Eaton Corporation (NYSE:ETN), as noted here. VRT is up 64.7% year-to-date, CCJ has gained 83.5%, GEV has returned 79.1%, PWR is up 41.1%, while ETN has added 13.4%. Meanwhile, the AI boom continues to lift the broader market, with the S&P 500 up 15.6% year-to-date.
By Alex Kimani for Oilprice.com
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Source: finance.yahoo.com
