Today (September 9) Jamie Dimon, the company’s CEO JP Morganhas joined a growing chorus of people warning of the increased likelihood of a U.S. stock market crash.

Investing during a bubble can be exhilarating, but it can also create complacency. For those who want to ride along, I think the most essential strategy is to not try to time the absolute top. This may mean that when the music stops, you will be left without a chair.

Technology bubble

The key feature of any bubble is the confirmation that it is a bubble. The thing about bubbles is that they draw everyone in, creating a common illusion.

This is what happened during the dotcom bubble in the slow 1990s when Cisco systems AND Vodafon launched on the moon, promising all the hardware needed to build the Internet.

The problem was that all these expenses did not turn into profit, mainly because the Internet did not evolve in the way these types of companies expected.

Are we repeating the same mistake today? Maybe.

Profit bubble

Nvidia (NASDAQ: NVDA) is the poster child of the AI ​​revolution. Revolutionary graphics processors gave it a near monopoly. In a mad rush to expand their infrastructure, AI hyperscalers Microsoft, Alphabet AND Meta we spent like drunken sailors.

Today, Nvidia is a cash cow. However, even if fundamentals remain mighty, if market expectations begin to exceed reality, there may be little value left in the company at its current valuation. Never forget that even great companies can sometimes be a bad investment.

Capital expenditures among hyperscalers remain solid. However, despite this, no one has yet seen a real return on their investments. So far, no solution to the thorny problem of AI hallucinations has emerged.

Another very essential point to note is that vast language models are extremely energy-intensive. So much so that models of this type are now starting to compete with domestic electricity consumers, driving up prices in many US states. This fact has not escaped the attention of politicians and there may well be pressure to tighten regulation of the industry.

Conclusion

Today’s Nvidia investment case hinges on whether capital spending on AI chips will continue to skyrocket. As long as investors believe this, the bubble will continue to grow. However, I am skeptical whether this is possible. This is the only reason why I am sitting on the sidelines for now, waiting for a better starting point in the future.

Of course, I could be wrong and therefore miss the greatest investment opportunity since the Internet, or perhaps of all time.

But when I look back at virtually every other major innovation, from the railroad to the automobile, the color television, the VCR, the photocopier, and the Internet, I see the same pattern. Either the pioneers made a terrible investment, or investors had to wait longer than expected for any returns.

For me today, patience is key. At the moment, I’m looking for investment opportunities beyond artificial intelligence and Magnificent 7. However, if my hunches are correct and the “bubble” bursts, these tech titans will soon have a much more attractive entry point into my portfolio.