Is There an AI Bubble – and If So, How Do Investors Navigate It?

It’s the talk of the market – has the rapid ascent of AI technologies overly inflated stock market valuations? Ask five investors and one may get five different opinions. Still, the answer has significant bearing on how market watchers look at 2026. Recent insight from T. Rowe Price explored the topic – and how investors can chart a course through it.

See more: What Do Investors Do With the November Jobs Report?

Tim Murray, T. Rowe Price capital markets strategist, penned a research piece asking whether the AI revolution has turned into a bubble. Addressing concerns that the rise of AI mirrors the internet bubble of the late 90s’ Murray cited the stronger fundamentals as a reason for greater confidence. While Google searches about an “AI bubble” have spiked amid high P/E ratios and eye-watering capex spend plans by hyperscalers, he wrote, the data is there to back up the AI case.

“Much of the valuation expansion in AI winners has been matched by equally strong earnings growth,” he wrote. “Current profitability levels go a long way toward supporting these valuations—assuming they can be maintained.”

An AI Bubble? What Options Investors Have

It’s that question of whether they can be maintained – or not – that looms for investors. Murray points to spreads for firms like Amazon (AMZN) and Microsoft (MSFT) in line with other large companies as reason not to worry too much. 

What kind of tools do investors have, then, in that wait-and-see environment when it comes to AI bubble concerns? Active ETFs can help investors stay invested in those AI-related areas while also staying flexible. Where certain tech ETFs lean all the way into AI, active ETFs like TTEQ, for example, invest in innovation wherever it can be found. 

TTEQ, the T. Rowe Price Technology ETF, charges only 63 basis points (bps) to actively invest in global large cap tech firms. Its manager, Dom Rizzo, recently talked to VettaFi about the fund being in “AI on” mode – and when it might switch to “AI off” mode.

To pull from an old saying, this A.I. zeitgeist may rhyme with past bubbles, but that doesn’t mean it is a bubble itself. Nevertheless, investors can look to active ETFs to get AI upside while also navigating its related uncertainty. 

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