It’s hard to be genuinely bullish on stock markets these days, even as the AI revolution moves ahead and models like Claude Code and Claude Mythos look to transform the way we think about the software. Indeed, the powerful new AI tools sparked the SaaS-pocalypse, and the big question is whether we’ll be in for more AI-driven apocalypses in other parts of the economy as the new technology looks to threaten business models while creating new opportunities for investors.
Any way you look at it, the degree of uncertainty is at a high point with the rise of new kinds of AI models, many of which might need to stay behind closed doors for a while longer before the right safety guardrails can be put into place.
Add concerns about the closed models falling into the wrong hands, and perhaps more profoundly disruptive frontier technologies might hover in the background for a while longer, at least until the technology is guaranteed to be behind lock and key.
If the latest and greatest technology becomes less available to everyday users, the big question is what could happen next in the AI boom and whether investors will grow fatigued with the AI trade. Despite the profound, real applications of models like Mythos, questions linger about whether the massive CapEx being spent by hyperscalers will prove a smart investment.
At the same time, there are a lot of smart people (Michael Burry is just one) who view the AI boom as a bubble and one that could burst. History certainly seems to suggest such a revolutionary technological bull run won’t end all too well.
Meta Platforms: A historic discount in a hot AI market?
But, in my view, I think it’s hard to paint a bubbly picture with too broad a brush, especially when you’ve got a company like Meta Platforms (NASDAQ:META | META Price Prediction) trading for 18.0 times forward price-to-earnings (P/E) with more than enough cash to spend aggressively.
While Meta’s newest model, Muse Spark, may face an uphill battle as a slew of other models compete for consumer engagement, I do think that the behind-the-scenes wins are most powerful for a company like Meta. In terms of invisible AI or monetization in the background, I think a company like Meta really does stand tall.
Perhaps the big money lies internally (think digital labor and automation) and not just in selling chatbots and agentics to consumers. Add the tremendous opportunity to sell agentics to the enterprise, and I think the market might be missing something with Meta as it moves fast, stays agile, and maintains its optionality.
Finally, it’s hard to know what the next big leap will be as frontier research goes above and beyond scaling. With a supercharged research team and deep pockets, I think owning Meta just makes sense, if not as a play on Zuckerberg’s leadership, perhaps as another major diversifier for an AI portfolio looking to have as many horses in the race as possible.
With Meta’s recent AI reorganization hitting suddenly and causing internal volatility, perhaps investors are too quick to dismiss the firm as it adopts a leaner, more aggressive strategy than some of its peers in the space. Add new AI features rolled into existing products, including Facebook’s AI Mode, into the equation, and it certainly does feel like Meta is taking a page out of the playbook of firms that have already found early wins in this AI boom.
The bottom line
So, is AI a bubble or the real deal? The technology itself is very real. But in terms of the stocks playing the revolution, I’d argue that there exist ample opportunities as well as traps.
As an investor, it’s vital to put in the due diligence to ensure one’s betting on an appropriately-priced secular winner, rather than overpaying after a cyclical AI gainer that might already have a supercycle priced in. In terms of opportunities, perhaps the hyperscalers and not the crowded picks-and-shovels plays are where the generational moats are.
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