Will AI shares keep rising or are they heading for a crash?

Tuesday, 18 November 2025

King Charles III presents the 2025 Queen Elizabeth Prize for Engineering to Nvidia CEO Jensen Huang, for his contribution to the development of modern machine learning in the field of Artificial Intelligence, this month. Martin Hawes says his “Nvidia shares are up 1200%” over the last three years, but his managers have kept them from becoming “an over-sized part” of his portfolio. (File photo)

Martin Hawes is a financial writer and presenter, and has written 25 personal finance books including his latest, the best-selling Retirement Ready. He lives in Christchurch and writes a weekly column.

OPINION: A market is an organised argument between buyers and sellers. On the one side are the bulls who are the optimists and think the market will rise. On the other are the bears who are pessimistic and think the market will fall. To have a market you must have both buyers and sellers each with their own opinions on what they think will happen next.

Of course, both sides – the bulls and the bears – have their reasons and it is only time that tells us which is right.

At the moment we see this most clearly when we consider the market for AI shares. Returns have been excellent from these companies (the bulls have been ascendant) but now we hear many voices saying the market is about to crash.

So, should we be bullish or bearish on tech shares?

I am with the bulls on this one – I do not see an imminent, major crash. Although I no longer manage my own investments, I am pleased to see my portfolio still has good exposure to technology in general and AI in particular.

Nevertheless, to make a good decision you need to know the case for both sides. You cannot make a considered, rational decision either way unless you have examined both sides.

The bears base their argument on very high share prices – tech company shares have been bid up to unsustainable levels, they say. The AI story has been completely overdone with AI not yet showing much use according to the bears – people and businesses are not using it to any great effect. And, some of the major companies have sunk hundreds of billions of dollars into AI.

For a bear, this money is just that - sunk.

The billions going into data centres, smart silicon chips and energy to train computers is so great there can never be a reasonable return. Eventually, (quite soon, according to some bears) the market will wake up and crash. The bears point to what happened with the Dot Com boom and bust of 1995 to 2000 and think the current boom will similarly end in tears.

However, there are bulls who have another point of view – and they also have their reasons.

First, a bull might acknowledge that by some measures (especially Price:Earning ratios) a lot of AI companies do look expensive. However, by other measures (especially Price earnings:Growth ratios) values look quite reasonable. Effectively, say the bulls, the companies associated with AI are growing their profits so fast that prices do not look as outrageous as the bears say.

The bulls say that we are at the very beginning of AI. In 10 years’ time, AI will have changed the world as we know it with hugely improved productivity and profits.

Are you set to lose any money? You might be

Moreover, some of the AI players are big, diversified businesses (think Amazon, Microsoft, Google, Nvidia) who are investing in AI with their profits. Unlike the Dot Com crash of 2000, these companies are not start-ups using debt to build their investments in data centres. Instead, they are developing AI out of their prodigious profits.

Finally, say the bulls, the market is doing what any healthy market should do: it is climbing a wall of worry. Bulls are fearful and worried but taking everything into account they are buying in spite of it. That is a good sign; the market knows the risks and high share prices are factored in already.

And so the argument rages. We will only know in the coming years who is right and who is wrong.

However, as investors we cannot wait for years - as investors, we have to decide now which side has the best case.

Even though I am on the side of the bulls, there are three things I think investors need to do to manage and mitigate risk:

Do not invest solely in tech – stay diversified with stakes in other industries.
Hold some cash so that if the bears are right and the market crashes you can buy cheap shares.
Keep your shares trimmed so that they do not become ultra-large positions. For example, over the last three years my Nvidia shares are up 1200%. If my managers had not sold a few every now and then they would form an over-sized part of the portfolio.

I cannot promise that I am on the right side of this argument (there is always uncertainty) but, for my money, the market for AI looks to have a lot to run yet.

Remember that experts can only say what they think will happen but cannot say what they know will happen. With that in mind, I will stay invested in AI.

Martin Hawes is a financial writer and presenter. He is not a financial adviser and the information and opinions here should not be taken as financial advice.