<img decoding="async" class="size-full-width wp-image-1601606" src="https://observer.com/wp-content/uploads/sites/2/2025/11/pieter-gqZ_FjElUhY-unsplash.jpg?quality=80&w=970" alt="A group of bubbles in the air." width="970" height="647" data-caption='Nvidia’s strong results challenge fears of an A.I. bubble, but investor caution persists. <span class=”media-credit”>Pieter/Unsplash</span>’>
What a difference a day can make. Nvidia shares surged on Wednesday after the chip giant reported better-than-expected earnings and guidance, defying growing talk of an A.I. bubble and high-profile exits from investors like Peter Thiel. But just 24 hours later, Wall Street’s A.I. darling nosedived more than 3 percent yesterday (Nov. 20) as hopes for another interest rate cut this year faded following a hotter-than-expected September jobs report.
Those renewed rate concerns, combined with lingering fears that A.I. stocks are dangerously overpriced, triggered a sharp market reversal. The Dow erased a 700-point gain to finish down 386 points yesterday, while the Nasdaq fell 486 points and the S&P 500 dropped 103.
“NOT a bubble”
Nvidia reported total revenue of $57 billion for the August-October quarter, beating analysts’ expectations of $55 billion, with EPS of $1.30 versus the predicted $1.26. The company predicted that sales for the current quarter ending January should reach about $65 billion, above Wall Street’s consensus of $61.7 billion.
Wedbush analyst Dan Ives praised the results, arguing they show the A.I. boom remains solid. He pointed to Nvidia’s $2 billion data-center revenue beat and strong demand for its upcoming Blackwell and Rubin chips. He reiterated his view that the A.I. build-out is still in its early stages, with tech giants—or “hyperscalers” such as Google, Meta and Microsoft—expected to spend between $550 billion and $600 billion next year to accelerate A.I. adoption.
“The pure Nvidia numbers/guidance and strategic vision show the A.I. Revolution is NOT a Bubble…instead it’s Year 3 of a 10-year build out of this 4th Industrial Revolution in our view,” Ives said in a client note this week.
Why notable investors are dumping Nvidia stock
Still, after Thiel sold his $100 million stake in Nvidia—joining other major sellers like SoftBank, which recently unwound $5.8 billion—some investors began to wonder whether Nvidia and the broader A.I. trade may be approaching a plateau.
Concerns over lofty valuations have grown louder, particularly from famed short-seller Michael Burry, who has a $187 million short position against Nvidia. Burry has accused Oracle, Meta, Amazon and Google of understating depreciation for their A.I. infrastructure to inflate earnings through 2028.
Joseph Schuster, CEO and founder of ETF operator IPOX Schuster, said recent selling looks more like profit-taking than a sign that an A.I. bubble is ready to burst.
“The market is rotating, consolidating and digesting huge gains,” he told Observer, noting that investors are in a “risk-off market” for the rest of the year. “It doesn’t mean that something will burst or fall apart. It’s a normal part of the cycle.”
Schuster doesn’t expect a dot-com-style correction and remains optimistic about the A.I.’s long-term fundamentals, but he said Nvidia and other big tech names could see more downside in the weeks ahead. Nvidia, specifically, could slip to the $165–$170 range, he said.
Jane Edmondson, head of thematic strategy at ETF research firm VettaFI, agreed. “I have been in bubbles before, and it does seem different this time,” she told Observer. “I do feel like we are still very early days and only just now starting to see [A.I.] use cases that could be groundbreaking.”
“If you look at Nvidia’s order books, they are very strong and Huang expects lots of business to come, and I agree with him,” she added.
She rejected views that Nvidia’s price-to-sales (P/S) ratio of 30x is unsustainable, saying, “I have never seen companies achieve this level of growth. It’s exponential.”
As the market matures, Edmondson said, the winners and losers will become clearer. She expects firms with their own growth capital—such as Google, Meta and Alphabet—to emerge stronger than those that rely heavily on leverage.
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