Sam Badawi
Is AI a Bubble? | IWTB 26
10/9/2025, 9:55:42 PM
Economic Summary
- AI compute demand is running well ahead of supply, evidenced by Amazon raising GPU hourly pricing after NVIDIA’s Blackwell launch, implying utilization is maxed and margins for AI compute providers could expand (companies referenced: AMZN, NVDA).
- Data-center and AI utility companies (CoreWeave, Cypher, Galaxy, Iron) are being re-rated as GPU hours become a commoditized utility, which benefits providers selling power, cooling, and GPU time without building AI models themselves.
- Many AI/data-center stocks are far above their 200-day moving averages, creating overextension risk; a meaningful pullback or consolidation could follow despite strong demand.
- Software and application-layer winners (Snowflake, MongoDB) may see delayed growth because physical AI infrastructure constraints limit customers' ability to deploy large-scale models, pushing software tails to later years.
- Macro backdrop is mixed: markets near all-time highs and Fed rate cuts priced in could support a melt-up, but housing affordability, K-shaped recovery dynamics, and income inequality leave parts of the economy fragile.
Bullish
- AI compute demand is exploding, making GPU hours a monetizable utility.
- Hyperscaler capacity constraints and AWS/Azure/Google shortages should re-rate AI utility providers.
- Small caps and bios showing strong rallies; short squeezes and rotations can drive further upside.
Bearish
- Many AI/data-center names are extremely overbought and could see a 20%+ pullback.
- Oracle is trading at rich multiples with high debt, risk if revenue/margin expansion disappoints.
- Software adoption (Snowflake, MongoDB) may be delayed while physical AI infrastructure bottlenecks persist.
- K-shaped economy and high housing rates create macro fragility despite market highs.
Bullish tickers
NVDAAMZNGOOGLGLXYCOREWEAVECYPHER
Bearish tickers
ORCLSNOW
NVDA
Bullish
Central supplier of GPUs powering AI; demand surge and scarcity underpin pricing power and ecosystem re-rating.
Bearish
Exposure to cyclicality and very high investor expectations; pullbacks possible if AI euphoria cools.
AMZN
Bullish
AWS raising Blackwell GPU hourly pricing signals compute scarcity and monetization of GPU hours, benefiting cloud and service providers.
Bearish
Execution missteps in custom silicon (Tranium) and competitive cloud dynamics could pressure margins.
GOOGL
Bullish
Hyperscaler with TPU capability and strong position in AI compute demand; benefits from data-center theme.
Bearish
Complex financial arrangements with AI partners create uncertainty about who captures long-term economics.
GLXY
1 price targets
60
Bullish
Galaxy’s data-center contracts (CoreWeave) and energy approvals could materially re-rate valuation if capacity expands.
Bearish
Previously bunched with crypto exposure and volatile; downside risk if approvals or capacity ramps stall.
COREWEAVE
Bullish
Key AI infrastructure provider that captures GPU-run demand and benefits from rising GPU-hour economics.
Bearish
Private/competitive pressures and execution risks as demand scales.
CYPHER
Bullish
Positioned in AI compute/data-center theme and stands to gain from monetization of GPU hours.
Bearish
Name ambiguity and potential overexposure to hype; execution and margin pressure possible.
ORCL
Bullish
Large RPO/backlog growth from data-center deals could drive outsized near-term revenue recognition.
Bearish
Trading at high multiples with significant debt; market expects large margin and revenue expansion which may not materialize.
SNOW
1 price targets
360
Bullish
Strong data consumption economics and high net retention make Snowflake a likely long-term software beneficiary of AI adoption.
Bearish
Growth may be constrained near-term by physical AI infrastructure bottlenecks and competition from Databricks; valuation remains elevated.
ARCG
1 price targets
50
Bullish
Momentum breakout and short-covering could drive near-term sharp gains for this biotech/story name.
Bearish
Highly volatile small-cap / story-stock risk; subject to sentiment swings and short-squeeze dynamics.
IREN
Bullish
Market is pricing in a major AI client or hyperscaler deal, creating upside if confirmed.
Bearish
Unclear confirmation of hyperscaler contracts; price may reflect speculation rather than fundamentals.
People mentioned
Jerome PowellSamShaiLogicalDanielFrank SlootmanMike ScarpelliSridhar RamaswamySam AltmanDonald TrumpJim Cramer