AI Bubble Concerns Grow as Thiel Sells Nvidia Shares, Analysts Stay Optimistic

Nvidia (NVDA) stock came under fresh examination after

, Thiel Macro LLC, revealed in a 13F filing that it had completely exited its $100 million investment in the AI chip giant during the third quarter. This decision, made just ahead of Nvidia’s earnings announcement on November 19, has intensified worries about overvaluation in the AI industry, especially following in October. Despite these notable sell-offs, , with firms such as BofA Securities and D.A. Davidson reiterating Buy recommendations and setting ambitious price targets .

These high-profile divestments stand in contrast to the strong appetite for Nvidia’s data center chips, which experts attribute to increased spending by major cloud providers like Microsoft, Amazon, and Alphabet.

that these tech leaders are “almost universally” ramping up their AI investments, channeling significant funds into Nvidia’s offerings. Bank of America observed that, although doubts about AI profitability remain, Nvidia’s capacity to fulfill soaring demand could help reassure shareholders . Expectations for the upcoming earnings are high: with adjusted earnings per share forecasted at $1.26 for the quarter, and data center sales anticipated to make up about 90% of total revenue .

Mixed reactions from investors highlight ongoing debates about whether AI stocks are experiencing a bubble. , has supported competitors such as Substrate and AI startups Mercor and Cognition AI, indicating a move away from exclusive investments in chipmakers. At the same time, is being redirected into OpenAI and its Stargate initiative, a $500 billion AI and robotics center in Arizona. These shifts highlight a trend of reallocating funds toward AI infrastructure and applications, even as of current spending patterns.

Nvidia’s share price has shown significant swings,

but slipping 1.2% in premarket trading after news of Thiel’s divestment. The stock’s forward P/E ratio stands at 31.88x, surpassing the average for semiconductor companies, about AI’s future and apprehension about potentially inflated valuations. Experts like Oppenheimer’s Rich Schneider believe is “in the best position to lead” in the AI sector, though some warn that a market pullback could occur if earnings disappoint .

With the AI industry at a pivotal moment, investors are watching Nvidia’s earnings closely for indications about the direction of the broader market. The company’s success in managing explosive demand while maintaining sustainable growth will likely determine whether the current AI surge continues or faces a correction

.