AI bubble predicted to expand with significant market cap growth, but challenges in monetization remain.

From Investing.com: 2024-07-13 18:31:02

The AI bubble is predicted to expand further, with a marked increase in market capitalization for 27 large-cap AI stocks and a 127% surge totaling $10 trillion. Key players like NVIDIA and its major customers have seen substantial market cap growth, incentivizing further AI investment until at least 2025.

Six CSP customers including NVIDIA collectively held $108 billion in net cash and generated $223 billion in free cash flow by 2023. However, challenges in AI monetization remain, with an estimated $400-500 billion investment in AI servers lacking clear business models. Annual power costs for running GPUs in data centers are projected at $27 billion.

Jefferies analysts note high valuations of AI stocks but emphasize the support of strong cash flows compared to the dot-com bubble era. Despite potential risks, the bubble is expected to deflate if monetization struggles in 2025/26.



Read more at Investing.com: Jefferies says AI is already a bubble. But the bubble will likely get bigger By Investing.com