Global chip giant Nvidia reported that its revenues had soared 62% to $57 billion in the quarter ending October 2025, and projected sales would climb to $65 billion in the current quarter. Just as investors and sceptics were beginning to doubt the artificial intelligence (AI) run, Nvidia’s robust results appear to have reassured some that the AI momentum is real. The question is, how long can this good run continue?
The AI train
Corporations are also investing heavily in AI. Reports state that Google plans to invest $40 billion, while Oracle has committed $3 billion over the next five years. Bosch, the German multinational engineering and technology company, aims to deploy Euro 2.5 billion by 2027, while Nvidia has outlined plans to invest $10 billion in AI. Indian companies are also placing their bets. L&T recently invested Rs.1,407 crore for a 21% stake in E2E Networks, a firm specialising in AI and data centre development. Tata Elxsi, Zensar Technologies, Affle 3i and Persistent Systems have all announced AI-led strategies.
Countries like the United States (US), the United Kingdom (UK) and China have been pouring billions into AI data centres, chips and cloud infrastructure. India is also pursuing AI bets, albeit slowly. The industry believes that AI is the next big thing and no one wants to be late for the party.
The excitement is contagious. Asset managers, retail investors and global giants are all convinced that AI will reshape the world. Select Indian mutual fund (MF) schemes have taken a sizeable exposure to the AI theme. Parag Parikh Flexi Cap Fund has nearly Rs.19,000 crore—around 16% of its portfolio—allocated to AI-linked companies, as per Morningstar. With US indices now having over 30% weight in AI stocks, global exchange-traded funds (ETFs) are mirroring this trend. The Motilal Oswal Nasdaq 100 ETF allocates more than one-third of its assets to AI stocks, while the Mirae NYSE FANG+ ETF allocates more than half, as of October 2025, according to Morningstar data. Even Warren Buffett’s cautious portfolio has roughly 27% exposure to businesses deeply integrated with AI-led ecosystems, as per a report by Nasdaq.com.
Even if AI reshapes the world, is every company riding the wave worthy of the premium it commands today? Oracle is a clear example. Its share price climbed from around $150 to nearly $350 within a year purely on the strength of the AI narrative, before slipping back to the $220 range. AI doesn’t seem like a fad. Or is this irrational exuberance?
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AI vs dot-com bubble Some experts are comparing this period to the 2000 dot-com era. There was tremendous optimism, massive capital flows, soaring valuations and little regard for whether demand would catch up. Several MF schemes were launched to capitalise on the Internet theme, some of whose net asset values (NAVs) fell to as low as Rs.2-3 when the theme unravelled. The Internet eventually changed the world, but hundreds of companies collapsed before that happened. In the late 1990s, companies with no customers, no sales, and certainly no profits were fetching rich valuations based purely on website traffic, which they hoped would convert into revenue. When the revenue didn’t come, the entire pack collapsed.
Some reckon that today’s AI boom has similar ingredients. Countless startups are being launched, billions are being deployed, and expectations are sky-high. “Billions are being poured into graphics processing units (GPUs) and AI data centres. Everyone’s chasing the future. AI will be the future, but companies like Nvidia, Microsoft, Meta, Oracle, and OpenAI might be over-allocating capital to AI,” says Kirtan Shah, Founder and CEO of Truvanta Wealth.
A slice of AI in your MF
Funds with largest volume of AI stocks in their portfolios.
Vikas Gupta, CIO, Omniscience Capital, offers a different view: “In the dot-com era, companies didn’t even have revenues. Today’s AI giants make $300-500 billion in revenue and nearly $100 billion in annual cash flows. These are extremely profitable companies.” This alone makes the current cycle very different.
Viram Shah, Founder & CEO, Vested Finance, agrees. “These companies are fundamentally strong, with solid earnings and leadership in critical technologies like cloud AI, chips, and generative software,” he says.
Even valuations today are nowhere near the extremes of 2000. At the peak of the dot-com bubble, the top technology names traded at around 70 times the two-year forward earnings. In comparison, today’s biggest AI spenders—Microsoft, Alphabet, Amazon and Meta—trade closer to 26-30 times the forward earnings. Higher than normal, but far from bubble territory. Another similarity often highlighted is concentration. Today, the socalled ‘Magnificent Seven’ account for ab
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