As mega-cap tech stocks with clear AI ties extend what’s been a multiyear run of leadership, the other thing that’s being extended is talk of an AI bubble.
Those are the breaks when so many of today’s market participants were around when the dot-com bubble burst 25 years ago. Indeed, investors and market historians alike love history lessons and drawing parallels, stoking today’s AI bubble talk. But some experts believe that chatter is overstated. That could be a sign assets such as the Invesco Top QQQ ETF (QBIG ) have more upside ahead.
QBIG is coming off a solid October in which it gained 5.46%. Much of that appreciation was garnered last week when the ETF jumped 3.80% on its way to record highs. In fact, a case can be made that QBIG is the anti-AI bubble ETF. That’s because its concentrated lineup — it holds just eight stocks — is full of cash-rich, fundamentally sturdy companies. Those hallmarks were nearly impossible to find at the height of the dot-com mania in the late 1990s.
AI’s Youth Could Boost QBIG
Another reason AI bubble talk may be overhyped is because of the sheer youth of this disruptive technology. As is often noted, AI is in its early innings. That indicates widespread adoption hasn’t yet occurred. That could serve to refute notions of a bubble while supporting the case for QBIG.
“Organizations must first establish robust data infrastructure before they can effectively adopt AI,” according to BNP Paribas. “It requires appropriate database systems, scalable storage, and rigorous data security and governance. A recent survey found that while 78% of enterprises have adopted AI in at least one department, only 16% have deployed it across five or more. AI adoption is accelerating but it remains far from being a fully embedded enterprise capability.”
Agentic AI, the form of this technology in which computers and robots solve tasks with limited oversight, is potentially additive to the QBIG thesis. But it could be another indication some folks are getting carried away with the bubble talk. And Agentic AI is younger than its generative counterpart. But the former more than the latter could be the real longer-ranging driver of AI growth. And that could be a plus for QBIG.
“Agentic AI holds the promise of enabling new use cases where autonomous agents, powered by AI, will reason, plan, and act across IT systems and data, and thus automate many tasks,” added BNP Paribas. “Physical AI is also on the horizon as AI converges with robotics and other consumer devices. IoT (the Internet of Things) and edge computing – a distributed computing model that brings data processing and storage closer to where the data is generated, rather than relying on a centralized cloud – will unlock additional use cases.”
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