Artificial Intelligence (AI) Stocks: In A Bubble Or Not?

Last week I identified 21 large cap ($2B+) artificial intelligence (AI) stocks (see here and here) that jumped 26.3%, on average, in May. The question now is whether or not that jump in prices indicates that a bubble is still developing.

Of those 21 AI stocks:

12 have advanced further by an average of 5.9% since the end of May (i.e. MTD) and they are as follows, in descending order.

Tesla (TSLA): UP 16.4% MTD; UP 98.4% YTD
Super Micro Computer (SMCI): UP 11.8% MTD; UP 218.7% YTD
Netflix (NFLX): UP 6.3% MTD; UP 42.4% YTD
Advanced Micro Devices (AMD): UP 5.7% MTD; UP 92.9% YTD
Taiwan Semiconductor (TSM): UP 4.3% MTD; UP 38.0% YTD
Marvell Technology (MRVL): UP 2.6% MTD; UP 62.0% YTD
NVIDIA (NVDA): UP 2.5% MTD; UP 165.3% YTD
Bentley Systems (BSY): UP 2.5% MTD; UP 37.0% YTD
Applied Materials (AMAT): UP 2.1% MTD; UP 39.8% YTD
Palantir Technologies (PLTR): UP 2.1% MTD; UP 134.0% YTD
Palo Alto Networks (PANW): UP 1.8% MTD; UP 57.0% YTD
Advantest Corporation (ATEYY): UP 1.7% MTD; UP 100.3% YTD

(If the outperformers, TSLA and SMCI, are removed, the category has only advanced 3.6% MTD.)

The remaining 9 AI stocks - C3.AI, SentinelOne, CloudStrike, ServiceNow, Integral Ad Science, Lam Research, Synopsys, ASML Holding and Broadcom, have declined by 2.4% MTD, on average.

Summary

In total, the 21 AI stocks above have advanced 0.7% MTD.

The Global X Artificial Intelligence and Technology ETF (AIQ) invests in 93 stocks of:

companies operating across development and utilization of artificial intelligence technology in their products and services,
companies that provide hardware which facilitates the use of artificial intelligence for the analysis of big data,
information technology,
software and services,
software,
system software,
software research and
artificial intelligence software sectors

and it has advanced 3.3% MTD after having declined 9.7% during the month of May.

Conclusion

Given the results of the above analysis, the answer to the opening question as to whether or not a bubble is still developing in the AI sector is a resounding NO. Only Tesla and Super Micro Computer seem to be in a bubble at the current time.

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