In a Friday post, I discussed my belief that come tomorrow’s earnings release by NVDA, the “second shoe” will drop representing the popping of the AI stock bubble. Obviously, the first to drop was the “poster boy” Super Micro Computer(SMCI).

While NVDA is the company everyone knows and follows and it makes the chips and has the almost two trillion dollar market cap, SMCI had the better stock market performance, based on it’s smaller size and valuation. Together they make up the dynamic duo of the AI stock market bubble.

Whether I end up being correct or not, about what everyone expects will be another blowout quarter for NVDA, and my belief that the stock tanks anyway, or it doesn’t do so for another undetermined period of time, it is inevitable that it will eventually do so.

It always plays out this way in the stock market cycle for tech stocks. The new thing, goes bat shit crazy for months and sometimes years, but eventually it grows so large and money chases it to such ridiculous valuations, that it can’t keep growing at the same exponential rate.

Many of the companies continue to exist and some even keep growing, especially those like Apple that reinvented themselves or come up with new products. Even those though, have steep corrections along the way and most get displaced or at least slowed down by competition as well.

NVDA and AI will be with us for years to come but this AI hype, bubble cycle has pretty much run it’s course for this initial phase, at least as far as the stock prices are concerned.