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Investing

The AI Bubble That Isn’t

Photo of Jeremy Phillips
By Jeremy Phillips Published
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
The AI Bubble That Isn’t

© JodiJacobson / E+ via Getty Images

I’ve been watching the AI infrastructure buildout pretty much every quarter for the past two years now, and I keep coming back to the same question: is this a bubble, or is this something different? The bubble fear is reasonable. Valuations got extreme. Retail piled in. Anyone calling it dot-com 2.0 had a reasonable case.

In a real bubble, the weakest fundamentals can command the highest prices. The most speculative names fly highest. SoundHound AI (NASDAQ:SOUN) is the tell. In a true bubble, SOUN would be parabolic. Instead, it is down 32% year-to-date and off 66% from its January 2025 peak. That is a market discriminating.

The single most important distinction between this cycle and a genuine bubble is whose money is being spent. Specifically, capex as a percentage of free cash flow at the hyperscalers.

Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) committed roughly $180 billion in capex. Amazon (NASDAQ:AMZN) guided to approximately $200 billion. Meta (NASDAQ:META) is spending $115 to $135 billion. Microsoft (NASDAQ:MSFT) spent almost $30 billion in capex in a single quarter, up 89% year-over-year. This is operating cash flow from the most profitable businesses humanity has ever produced, not venture dollars or SPAC proceeds.

Nvidia (NASDAQ:NVDA) generated $34.9 billion in free cash flow in a single quarter. Its data center networking revenue grew 263% year-over-year as customers locked into full-stack NVLink infrastructure. Palantir posted a Rule of 40 score of 127% while U.S. commercial revenue grew 137% year-over-year. Yet Palantir is down 21% year-to-date. In dot-com, everything went up together. Here, the market is sorting winners from losers in real time.

The risks are real: concentration is genuine, capex could produce disappointing returns, and geopolitical friction is a live variable. But the AI bubble everyone feared already partially deflated in the speculative fringe. What remains is a generational infrastructure buildout funded by cash, anchored by real demand, and judged by real results.

Contact [email protected] for any questions or corrections.

This is a paid advertisement for BluSky AI Regulation A offering. Please read the offering circular at https://invest.bluskyaidatacenters.com/

Compensation disclosure. 24/7 Wall St., a brand of Flywheel Publishing, is paid $4.5 or each click on the promotional links in this article. This compensation is paid to us by Launch Potato LLC in connection with the Regulation A offering of BluSky AI. The per-click rate is fixed and is not subject to volume thresholds, conversion bonuses, or other adjustments. Our compensation does not depend on whether any reader invests, on the amount invested, or on whether the offering succeeds. Because compensation depends on click volume and the campaign has no fixed end date, the total amount we receive is not determinable in advance. Rate stated as of 8/8/26.

24/7 Wall St. and its affiliates hold no securities in BluSky AI. We do not endorse this offering or any statement made in the offering materials, and nothing here is a recommendation to invest. This promotional content was supplied or approved by the issuer and was not produced by our editorial staff.

BluSky AI  is conducting an offering under Regulation A of the Securities Act of 1933. Offers and sales may be made only by means of the qualified offering circular. Read it in full, including the risk factors, before investing: https://www.sec.gov/Archives/edgar/data/1416090/000149315226023491/form253g1.htm. All BlueSky AI  filings are available at https://www.sec.gov/edgar/browse/?CIK=1416090. Qualification of an offering statement by the SEC does not mean the SEC has approved the offering or passed on the merits or accuracy of the offering materials.

This is a speculative investment. The securities are illiquid, there is no public trading market for them, investors should be prepared to hold indefinitely, and investors should be prepared to lose the entire amount invested. Past performance does not predict future results. Forward-looking statements are estimates subject to substantial uncertainty.

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About the Author Jeremy Phillips →

I've been writing about stocks and personal finance for 20+ years. I believe all great companies are tech companies in the long run, and I invest accordingly.

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