From Mag 7's stock price soaring to Buffett's "last dance" building up positions in Google, Wall Street giants are firmly betting on the AI wave.

Wall Street's largest institutional investors typically pay more attention to primary market financing and other private investment markets, rather than publicly traded stock markets. However, with the unprecedented wave of artificial intelligence expected to completely reshape the economy in the coming decades, they are now closely monitoring the latest developments of the largest publicly listed technology stocks (such as NVIDIA, Google, and Microsoft). Currently, they are not worried about the so-called "AI bubble" and pessimistic views on popular AI technology stocks. Amid concerns about the high concentration of market capitalization among the "Big Seven Tech Giants" and the possibility of an AI bubble burst surrounding the US stock market, two seasoned investment managers overseeing hundreds of billions of dollars in funds expressed optimism about the trends related to investment in the forefront of technology and the AI investment boom at the "Delivering Alpha" conference. Popular technology stocks globally have shown dramatic fluctuations in recent market trades, especially the "Magnificent Seven" tech giants in the US stock market, which have repeatedly reached historic highs in market value weights in the S&P 500 index, and the increasingly high AI valuations have caused trading pressure. However, popular AI technology stocks such as NVIDIA, Micron, TSMC, and SK Hynix, benefiting from the AI investment boom, are still near their historical highs. Meanwhile, Warren Buffett-led Berkshire Hathaway recently revealed a massive investment in Alphabet, one of the Big Seven Tech Giants (Mag 7), after admitting to missing out on investment opportunities in the past. For Buffett, who is set to retire next year, Berkshire's significant investment in Google, a major bet on the AI wave, can be considered the "last dance" of the stock market guru. The so-called "Big Seven Tech Giants," accounting for about 35% of the S&P 500 Index, including Apple, Microsoft, Google, Tesla, NVIDIA, Amazon, and Facebook's Meta Platforms, are the core driving forces behind the record highs in the S&P 500 Index and are seen by top Wall Street investment institutions as the most capable combination to bring investors huge returns in the largest technological revolution since the Internet era. Wall Street financial giants such as Goldman Sachs stated that there is still a massive potential push for investment cycles related to AI infrastructure, comparing the current AI spending frenzy and the surge in tech stock valuations to the early stages of the technology boom of the late 1990s, rather than reaching a speculative peak. In a research report, Goldman Sachs pointed out, "Based on multiple quantitative indicators, the current AI-related investment fervor is more similar to the tech stock investment craze from 1997 to 1998, rather than the pessimism surrounding the beginning of a bubble burst in 1999 or 2000." The period of enthusiastic investment from 1997 to 1998 was the foundation-building stage of the Internet era, where progress in productivity systems and infrastructure ecology began to show, but market speculation had not yet formed. The team of analysts from UBS highlighted that with the growing global AI computing industry chain and the continuous surge of stock prices of US tech giants, the conditions for the emergence of an "AI bubble" are gradually being met, but the possibility of a bubble burst is still far away. UBS stated that the high weighting of AI tech giants in the US stock market is still in the early stages of a potential bubble - the bubble has not taken shape yet, far from reaching the dangerous peak comparable to the bursting of the "Internet bubble in 2000. This is mainly because market valuations have not reached extreme bubble levels, tech investments as a percentage of GDP are controllable, and extreme signals such as massive mergers of the kind seen during the dot-com bubble era have not yet appeared. Analysts from BNP Paribas also stated that one of the core conditions to end the "AI bubble" dominating the tech stock bull market is the "Federal Reserve restarting the rate hike process," which currently seems unlikely. Having accurately predicted the bull market in US stocks at the end of 2022 and several times accurately predicting the long-term extension of this bull market, the well-known Wall Street investment firm Wedbush recently stated that the various short-term disturbances in the tech stock bull market since 2023 under the drive of the AI investment frenzy are normal phenomena. The fear of an AI bubble in the market is temporary, and the institution firmly predicts that with investors keen to position themselves in this unprecedented AI revolution through the "buy on dips" strategy on the stock market, US tech stocks (based on the Nasdaq 100 index) still have around 10% upside potential for the remaining year. No need to worry about the "AI bubble" and the tech stock sell-off wave At the "Delivering Alpha" conference last week, executives from two large investment management institutions - General Atlantic, with assets under management of $118 billion, and Coatue Management, with assets under management of $71 billion, explained why they are not worried about this round of AI-driven tech stock bull market. Philippe Laffont, founder and portfolio manager of Coatue Management, stated that the current AI investment boom has a very important difference compared to the "Internet bubble era" - he referred to it as "mega-scale advantage." This refers to the cash flow of technology giants including Alphabet, Microsoft, and Amazon, which are expected to invest over $500 billion next year in continuing to invest heavily in AI computing infrastructure, unlike the internet bubble era when most of the leading companies were unprofitable. Bill Ford, Chairman of the Board and CEO of General Atlantic, also agreed with this optimistic view, believing that the discussions in the market about the dollar amount are a reason to have confidence in the largest publicly listed tech stocks and not doubt. "The core drivers of this AI revolution are the big tech companies and leaders in the AI industry like OpenAI, they have huge advantages," he said in an interview. While Ford stated that his investment firm continues to focus on opportunities in the private market and actively invests in companies related to AI applications among the 200 companies in their investment portfolio, he added that, "If you don't understand what companies like Oracle, Google, and Microsoft are doing, you can't make good investment decisions." "We need to fully understand what they are doing, even if we are not directly investing in them," Ford said. "If you focus only on private companies and ignore the strategies, technologies, and market changes of large companies, you may not see the big picture and find it difficult to gain an advantage in the private market," Ford said in an interview. General Atlantic has been "active" in investing in AI in its portfolio companies, Ford said they have seen "significant returns" on their investments, he added that this is just the "frontier" of value opportunities brought by application-level AI, such as in customer service, coding, and digital marketing. Laffont, who leads an investment firm investing in both public and private companies, believes it is reasonable to be concerned about rapidly rising tech stocks because it may contradict a bullish view of valuations in the long run. He emphasized that for publicly traded stocks, although there is confidence in the future, this does not mean that this confidence has not been fully reflected in the price. He cited Oracle's recent price chart as an example - while he did not specifically indicate concerns about the company's valuation, other market skeptics recently issued warnings, stating that the stock's valuation has significantly overshot future revenue expectations in the past year, Oracle's stock price rose from around $150 per share to nearly $350, then quickly dropped to around $220. Alphabet, Google's parent company, is a good example of how the narrative on large technology stocks related to AI can change rapidly for the better, in its case, moving in a positive direction. Not long ago, some investors thought Google had completely failed in the AI competition due to the popularity of ChatGPT and Google Gemini AI applications in the long run. However, Alphabet exemplifies "catching up," leveraging Google Cloud and a full AI ecosystem based on Gemini AI applications with continuous growth in token volume and Google Cloud and Gemini revenue streams on the rise now Alphabet has become the best-performing large tech stock this year. Last week, Berkshire Hathaway, led by the soon-to-retire Warren Buffett, revealed a massive stake in the company, likely his last large position before retirement. Berkshire Hathaway's huge investment in Alphabet in the third quarter of 2022 caught the attention of global investors - Alphabet entered Berkshire's top ten holdings with a purchase size of $4.3 billion, as Buffett had previously admitted that he missed the opportunity to invest in the company. In 2019 at the Berkshire meeting, Buffett and Berkshire Vice Chairman Charlie Munger regretfully admitted they "screwed up" for not buying Alphabet earlier when they "could see how effective Google ads were in our own business. But we just sat there twiddling our thumbs." At that time, Alphabet's stock was around $59. By last Friday, Alphabet's stock price had closed above $276, and the previous quarter - the period when Berkshire bought shares of Google's parent company - the stock price never dropped below $170. Leveraging the unwavering investment in the "Gemini AI application software complete ecosystem" in recent years, Google's increasing share in the global cloud computing market shows a strong momentum, aggressively catching up with Amazon AWS and Microsoft Azure. Many SaaS software giants and leaders in AI applications like OpenAI have begun long-term collaborations with Google Cloud platform. Alphabet's Q3 earnings report for 2025 shows a significant increase in capital spending for 2025 to $91-93 billion, with added investments related to AI, expected to increase further in 2026. More importantly, Google Cloud, a subsidiary of Google, increased revenue by 34% year-over-year to $15.2 billion, highlighting the core growth drivers including AI cloud computing infrastructure and generative AI solutions as an ecosystem. The token volume processed by Google increased from 980 trillion in July to over 1,300 trillion within a year, more than 20 times, emphasizing that Google's strong AI spending trajectory is equally powerful in token monetization. The Q3 earnings report also reveals that Google Cloud computing orders, including orders for cloud AI computing capacity, surged by 46% quarter-over-quarter to $155 billion, indicating a substantial backlog of cloud computing and AI computing projects to be implemented in the coming years and requiring a larger scale of AI data center capacity for comprehensive digestion on a global scale. Nasdaq ended last week with a decline, marking the second consecutive weekly decline since August but still below historic highs by less than 5%, and above the 200-day moving average. Since the low point of the COVID-19 pandemic, the Nasdaq Composite Index, the tech stock benchmark in the US stock market, has risen by over 245%. The AI investment frenzy is completely different from the Internet bubble era in 2000. Philippe Laffont from Coatue Management believes that the rapid rise in global tech stocks is indeed a phenomenon that investors need to study, including better understanding not only bullish cases but also bearish ones - for example, Michael Burry, known as the "Big Short," who accurately shorted the market before the 2008 financial crisis, recently claimed that mega-cap companies are artificially boosting profits. However, Laffont suggests that comparing 2025 with 2000, the bullish narrative is fundamentally different. He stated that during the internet bubble era, "all capital was driven by initial public offerings (IPOs) and relatively sketchy business models of unprofitable new companies." He emphasized, "Today, the largest publicly listed tech companies are developing toward generating nearly $1 trillion in free cash flow every year, and they have almost no debt." "In the Internet bubble era, most companies in the market, even if they generated free cash flow, did so with 'massive debts,'" Laffont explained, limiting their investment choices. However, in the current AI investment frenzy, large tech companies tell a different story. "They are being invested in by responsible boards and big Wall Street giants with strong demands for capital returns, so I think the system is quite healthy, and the leverage implicit in the system is very small," he emphasized. "I will remain vigilant, but if you ask me 'Am I worried?' I am not worried about them at the moment," he added. Laffont and Ford are not the only top executives of major investment institutions at the "Delivering Alpha" conference to hold a bullish view on the AI investment theme. Mary Callahan Erdoes, CEO of J.P. Morgan Asset & Wealth Management division, said in another panel that investors should focus on future growth opportunities in the AI era, rather than whether the current global AI investment boom is a bubble. Ford stated that the investments made by these large public companies and AI unicorns among each other - the so-called circular AI economy - are just a typical phenomenon of the tech age, which he believes is a sign of bullishness, based on these companies' belief that they have "real opportunities on the other end," and these massive investments are supported by their current revenue and profits. "They are all competing for a very significant award," Ford said. "And it's going to take massive investments to win now." He added. "The astonishing rise in the valuations of the 'Big Seven Tech Giants' is due to their strong profit follow-up ability," he said in an interview. "This is not a leap from a P/E ratio of two to three. Their profits are long-term." Ford said. These two top Wall Street institutional investors stated that while AI computing costs may decrease, they do not believe the market will collapse because of this, a situation that could occur in a very typical commodity-driven global scenario. "It's like gasoline to an engine," Laffont said in an interview. "It's strange because if I say when prices drop, P times Q should be zero, but even when P drops, P times Q can approach infinity," he mentioned an equation that specifies that when commodity prices drop the overall revenue opportunity will significantly drop as well, trying to show that while the price drops, the opportunities brought by each unit price (P) of the commodity (PQ) will increase significantly, in some cases, even exponentially. Laffont stated that he believes the price of token computing power will decrease significantly, but he called the elasticity of what low-priced tokens can do "almost infinitely wide," meaning that a lot of new innovations and changes can be made through low-cost computing, far exceeding the significant revenue decrease caused by traditional price drops. "There are so many things can be done, not just intelligence and software, and also in cars, humanoid-like Siasun Robot&Automation, and machines. I am quite optimistic about the next decade or more, even if the token price drops significantly, the overall P times Q will still achieve strong growth," he said. This means that, in Laffont's view, even with the overall decrease in the price of token computing (P), the applications (Q) it can drive will increase significantly, thus driving overall market value growth.