The bubble nightmare returns to shake world markets, especially after the alarm raised by Google, which triggered a chain of sales from the United States to Europe, up to the Far East. But what are the chances of a bubble bursting? And what is the real fundamental situation? Nvidia’s quarterly results, expected this evening after the US stock exchange, will provide a little more clarity, at least with the aim of reassuring or reinforcing operators’ concerns.
Google’s warning: “If a bubble bursts, no one will be saved”
The alarm launched by Sundar Pichai, CEO of Alphabet, Google’s parent company, contributed to shaking the markets yesterday, as he stated:
“If the bubble triggered by the AI development boom exploded, no company would be safe, not even us.”
The manager then spoke of the “extraordinary moment” that the technological sector linked to AI is experiencing, but he also spoke of “irrationality” in such a compelling interest.
Mr Google’s considerations have once again alarmed the markets, especially after last week another “signal” triggered sales in the Tech sector: the purchase of put options betting on the decline of Nvidia and Palantir by Michael Burry, an investor closely followed because he predicted the subprime crisis in 2008.
Market looking for equilibrium
Despite the “tom-tom” talk of a bubble, not all observers think that the market is facing imminent risk. The sell-off that has hit Wall Street in the last two weeks, according to Fabrizio Santin, Senior investment manager of Pictet Asset Management, can be attributed to “a physiological phase of consolidation after a period of strong increases”.
“In the last part of the year it is normal to observe greater volatility. Many operators tend to ‘cash out’ on the accumulated earnings to close the financial year in order, especially in a complex year like 2025, marked by tariff tensions and a climate of economic uncertainty”
explains the Pictet AM analyst, recalling that
“the gradual improvement in relations between the United States and China has represented an important stabilization factor” and this has “improved sentiment for the coming months”.
Profits and Investments in AI: focus on Nvidia
In terms of quarterly results, what worries investors above all is the massive size of the investments compared to the sustainability of the expected returns. A concern which, however, at the moment seems to have only concerned Meta, which has announced spending commitments of 72 billion dollars, while the results of the main hyperscalers remain robust: Amazon records an acceleration in the US Cloud business, while Google surprised positively in the data center segment, confirming the centrality of digital infrastructure in the new investment cycle.
“The general context remains constructive, with high valuations but still far from the euphoric levels observed in the early 2000s”
Santin observes, adding
“For now, the conditions for a lasting reversal are not in sight: the markets remain supported by solid profits and a global economy that continues to expand, albeit at a moderate pace.”
Among the main drivers to monitor this week are Nvidia’s accounts, a true barometer of the entire AI ecosystem. In addition to the quarterly results and the EBIT level, the guidance for the coming quarters will be crucial.
“After the run of recent months, the risk is that market expectations have risen significantly. The new collaborations announced limit the space for short-term surprises, but at the same time represent the basis for more structural growth. If profits were to approach $500 billion, well above analysts’ estimates, the surprise would be positive, but likely destined to emerge gradually over the next few quarters”
explains the Pictet expert.
