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Bears Misreading AI: Why the Stocks Will Keep Climbing

  //stocks-investing.news-articles.net/content/202 .. eading-ai-why-the-stocks-will-keep-climbing.html
  Published in Stocks and Investing on Monday, December 22nd 2025 at 7:24 GMT by MarketWatch

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Why the Bears Are Misreading AI – and Why the Stocks Will Keep Climbing

In an era where artificial intelligence is no longer a buzzword but a transformative technology, a recent MarketWatch piece argues that investors who remain skeptical of AI‑driven companies are simply chasing short‑term volatility. The article, “What the Bears Are Getting Wrong on AI and Why These Stocks Will Keep Climbing the Wall of Worry,” offers a comprehensive rebuttal to bearish arguments, weaving in data, industry insights, and forward‑looking trends to paint a bullish picture for the AI sector.

1. The Core Thesis

At its heart, the article argues that the “wall of worry”—the spike in price volatility and the accompanying fear that AI stocks will over‑react—is largely unfounded. The bearish narrative, the author contends, is built on three faulty premises:

1. Over‑inflated Valuations – The belief that AI‑related shares have already reached “price‑pushing highs” that cannot be sustained.
2. Limited Real‑World Impact – The idea that AI’s practical adoption is still far from widespread or economically significant.
3. Supply Chain Constraints – The notion that chip shortages and data‑center bottlenecks will keep AI progress in check.

The piece systematically dismantles each of these arguments by highlighting recent earnings, market trends, and technological breakthroughs.

2. Valuations, Not Just Numbers

The author points out that while AI stocks such as NVIDIA (NVDA), Microsoft (MSFT), Alphabet (GOOGL), and Meta (META) do trade at high multiples, the context matters. A CNBC link embedded in the article notes that the price‑earnings ratio of NVIDIA is now around 55x, but this is an average of 10‑year growth, not a short‑term spike. The article cites recent quarterly reports where NVIDIA’s revenue grew 70% YoY, largely driven by AI GPU demand. Similarly, Microsoft’s Azure AI services reported a 120% increase in new customers, while Alphabet’s AI‑related cloud services outperformed its broader cloud segment by 30%.

Moreover, the piece emphasizes that AI is a productivity multiplier. A referenced Investopedia article explains that AI can increase labor productivity by up to 40% in certain sectors. When productivity gains translate into higher earnings per share (EPS), the high valuation becomes justified.

3. Real‑World Impact and Adoption

The bearish claim that AI adoption is limited is countered with evidence from industry reports and case studies. The MarketWatch article links to a McKinsey & Company report that projects $5.8 trillion in global value from AI by 2030, a 38% rise over the current estimate. It also highlights how companies like Amazon (AMZN) are integrating generative AI into their logistics and recommendation engines, which has already shaved an estimated $10 billion off operating costs.

Further, the article references a Bloomberg piece detailing how AI is now embedded in over 70% of Fortune 500 companies’ R&D pipelines. The author also notes that AI software as a service (SaaS) has outpaced traditional SaaS growth rates, with platforms such as OpenAI’s GPT‑4 API reportedly generating millions in monthly recurring revenue. These data points suggest that AI’s economic footprint is expanding far faster than bearish narratives predict.

4. Supply Chain and Infrastructure: Not a Bottleneck

One of the most common bearish concerns is that chip shortages and data‑center constraints will throttle AI growth. The article counters this by citing a National Institute of Standards and Technology (NIST) study that projects the U.S. semiconductor supply chain will double its capacity by 2027, driven by AI demand. It also references a Reuters interview with a data‑center operator who noted that AI workloads are increasingly being off‑loaded to specialized tensor processing units (TPUs), which can be scaled in cloud environments without the physical constraints that traditional GPUs face.

Additionally, the article draws attention to the rapid deployment of edge AI solutions, which reduce reliance on large data‑center clusters. This trend is supported by a TechCrunch article that discusses how automotive and IoT companies are deploying AI on the edge, further diversifying the demand base.

5. The “Wall of Worry” Explained

The “wall of worry” refers to the emotional and price swings that investors experience when AI stocks jump to new highs. The article suggests that these swings are partly psychological: investors often overreact to AI headlines, creating a self‑fulfilling cycle of buying and selling. A link to a Harvard Business Review piece on behavioral finance is used to explain how hype can amplify volatility, but ultimately, the underlying fundamentals—such as earnings growth and market share—anchor the long‑term trajectory.

6. Bottom‑Line Takeaway for Investors

The MarketWatch article concludes with a set of practical recommendations for those who are still on the fence:

1. Diversify Within the AI Ecosystem – Own a mix of GPU makers (NVIDIA, AMD), cloud providers (Microsoft, Google, Amazon), and AI SaaS players (OpenAI, C3.ai).
2. Watch for Regulatory Clarity – Keep an eye on how U.S. and EU data‑privacy rules might affect AI deployment, especially in fintech and healthcare.
3. Monitor Earnings Season – Quarterly results often provide the clearest gauge of whether AI demand is translating into higher profits.
4. Keep an Eye on Emerging Markets – AI adoption in China, India, and Southeast Asia is growing faster than many Western analysts predict.

7. Bottom Line

In sum, the article provides a robust, data‑driven rebuttal to the bearish case on AI. By linking to reputable sources—ranging from CNBC earnings coverage to McKinsey research and Bloomberg reports—it builds a compelling argument that AI stocks are not merely speculative bets but are underpinned by significant real‑world adoption, solid earnings growth, and a rapidly expanding market. For investors willing to ride out the volatility, the “wall of worry” may well become a stepping stone to substantial long‑term gains.