For this Sunday’s Bigger Picture of course, we’ll look forward to what to anticipate both negative and positive. And these questions are both financial and secular from a bottoms up technology perspective. Let’s unpack it together this Sunday.
There are some big AI financial questions for the markets both private and public in 2026. I’ve written about these ‘AI Bubble’ questions for months, especially in terms of the AI tail wagging the GDP dog:
“Declines in tech stocks? Healthy movement. Local officials stopping data centers? Prevents overbuild. Valuations high? Well, they deserve to be.”
“Why it matters: Every risk for the AI trade is framed as a positive by Wall Street bulls who are adamant we are in the early stages of the AI revolution.”
“Between the lines: Let’s run through the threats to the AI trade and then the bull case Wall Street is attaching to each of those.”
1. “Stock valuations are too high.”
“Wrong! “Nvidia is being valued like a mediocre growth stock. It’s obviously not,” Vivek Arya, a senior analyst at Bank of America, mentioned during a 2026 semiconductor outlook call.”
“When you consider the 50% sales growth expected for Nvidia, it is actually undervalued, several strategists who spoke with Axios said.”
“Nvidia trades at 23 times earnings, the second-lowest ratio among the Magnificent 7. Cisco traded at 140 times ahead of the dot-com bubble.”
“Tech stocks are also not ferociously rallying the way they once did, which suggests investors are choosier, which is “healthy,” Gil Luria, senior analyst at D.A. Davidson, told Axios.”
2. “Demand for AI will not materialize.”
“Nope. OpenAI’s weekly ChatGPT users just hit a record of 800 million.”
3. “Data centers are getting overbuilt.”
“Great news! Local officials and state lawmakers are going to put a cap on data center growth as they start to push back on that infrastructure from both sides of the aisle.”
“That’s a very healthy natural governor in this market,” Jeffrey Favuzza, a tech strategist at Jefferies, told Axios.”
4. “Too much money is being spent.”
“Sure, these top tech firms are on average spending about two-thirds of their cash flow on AI infrastructure. Traditionally they spend very little.”
“But “that cash was just collecting dust” before the rollout of AI, Arya at Bank of America said. In that view, AI spending is a way to create future growth and sales opportunities necessary to survive the AI revolution.”
“More capex is bullish. Arya expects at least $1.2 trillion in capex by 2040.”
5.” Is AI ever going to make money?”
“That comes down to monetization, likely in the form of advertising and probably coming first from OpenAI, which is widely believed to come early next year.”
“New product releases are also expected to deliver more opportunities to monetize.”
“Favuzza is also watching how OpenAI works with enterprises: The company recently hired former Slack CEO Denise Dresser as its chief revenue officer, indicating a push to sell to more businesses.”
Then there’s the ‘this time it’d different’ argument, which is always worrisome in its own right:
“The bottom line: Throw out your business school investing textbooks. The rules of markets are changing in the face of the AI revolution, strategists argue.”
The Bull case is not to say Wall Steet isn’t looking to hedge its AI bets:
“Conversations with more than a dozen strategists and investors on their 2026 outlooks reveal that Wall Street is not worried about an AI bubble, but wants to add portfolio protection just in case.”
“Why it matters: Hedging was not very profitable in 2025,but the mix of macro uncertainty and AI concerns next year has investors worried that skipping protection could be costly.”
Besides the financial issues around AI, are the secular issues of note. Here I outline three of my biggest AI questions in 2026:
Will AI Data Centers & Power get to Scale through 2025 by Financial Markets?
These are some of the biggest financial and AI industry questions going into next year, that make up the Bigger Picture ahead. Rest assured it’s still the earliest days of this AI Tech Wave we’ve been tracking daily for almost a thousand days.
Of course there are some big, secular questions for just some the key companies involved as well, for 2026. There’re some notable year-end pieces to read linked below on said big questions.
