AI Bubble Post-Thanksgiving Crash Claim Analysis: NVDA & AI Sector

A Reddit post (Event Timestamp: 2025-11-27 20:27 EST) claimed the AI bubble would pop post-Thanksgiving for NVIDIA (NVDA) and the AI sector. The original poster (OP) cited:

• Detached valuations for NVDA and AI-related companies
• Hyperscalers’ warnings on unsustainable AI capex
• Increasing chip supply reducing scarcity premiums
• Seasonal liquidity thinness
• Lagging real-world productivity gains vs. AI spending
• Euphoric retail sentiment

Counterarguments in the thread included:

• NVDA’s 27x PE ratio is reasonable (comparable to Walmart/Costco with higher multiples)
• The prediction is unoriginal market timing
• AI sector already corrected in recent weeks
• Liquidity flows will drive further gains
• Exact timing of crashes is unrealistic

NVDA has experienced a moderate correction over the past 10 trading days, dropping ~6.9% from $190.17 (Nov 14) to $177.00 (Nov 28) [0]. The tech sector was up 0.53% on Nov 29, indicating no immediate crash [11].

Analysts are mixed:

• Bullish: The Motley Fool reports NVDA trades at 24x forward earnings (cheaper than Microsoft and Apple) [4], and Seeking Alpha articles suggest the AI bubble isn’t popping soon [5].
• Cautious: A Seeking Alpha report downgraded NVDA to Hold due to hyperscalers exploring alternative chips [6].

Thread counterarguments highlight NVDA’s reasonable valuation and existing sector correction, while OP’s bearish view focuses on competition and valuation risks.

• NVDA Price
  : 10-day change of -6.9% [0]
• Valuation
  : Forward PE ratios range from ~24x [4] to ~27x [6,9]
• Market Share
  : Expected to drop from 85% to 75% due to competition [3]
• Sector Performance
  : Tech sector up 0.53% on Nov 29 [11]

• Direct
  : NVIDIA (NVDA) [0]
• Related Sector
  : Technology [11]
• Competitors
  : AMD, Broadcom [3]
• Hyperscalers
  : Google (GOOG), Microsoft (MSFT), Meta (META) [2,3]

• Exact details of hyperscalers’ AI capex reduction plans
• Timeline for increased chip supply
• Quantifiable data on retail euphoria in the AI sector

• Bearish
  : OP’s view on valuation and competition risks [6]
• Bullish
  : Analysts’ focus on NVDA’s moat (systems, not just chips) [7] and reasonable forward PE [4]

• Users should be aware that competition from Google’s TPUs (Meta exploring adoption [3]) may impact NVDA’s market share and margins [6].
• This development raises concerns about NVDA’s valuation if AI capex growth slows, as the stock trades at a premium to some peers [6].

• NVDA’s upcoming earnings report
• Hyperscaler chip adoption announcements
• Tech sector liquidity in December (seasonal thinness) [event context]

• Competition Risk
  : Google’s TPUs and AMD’s chips pose a threat to NVDA’s dominant market share [2,3].
• Valuation Risk
  : NVDA’s forward PE (24-27x) depends on sustained AI growth; any slowdown could lead to revaluation [6,7].
• Seasonal Risk
  : December’s liquidity thinness may amplify volatility, as noted in the OP’s claim [event context].

This analysis is for informational purposes only and does not constitute investment advice. Always conduct your own research before making financial decisions.