Nvidia Falls Almost 20%. Is the AI Bubble About to Pop?

AI generated image of an astronaut on a horse in the style of Picasso.

​Nvidia is down -17.8% since its high of $212 on Nov. 3, 2025. Oracle has seen losses of -48% since September. The S&P500 is only off by -1.9%.
 
Nvidia has been the story for the past few years, embraced by Wall Street insiders and Main Street alike. Artificial intelligence and the data centers needed to drive it have led to a surprisingly resilient U.S. economy, with revised (upward) expectations of 1.7% GDP growth in 2025 and 2.3% in 2026. At the same time, as you can see in the results at the top of the blog, Nvidia shares are down almost -20% over the last month and a half. When stocks head south, it’s the Magnificent 7 that is dragging everything down. It’s important to remember that we could have purchased Nvidia shares for $94 on April 8 of this year. Nvidia closed at $170.94 on Nov. 17, 2025; the all-time high is $212.19/share.
 
So, what is your best strategy for incorporating AI into your portfolio, while smoothing out the volatility? Which horse should you bet on? Google AI, Grok, ChatGPT or an upstart that has yet to take centerstage?
 
Here are the things I’ll cover in this blog.
 
The Magnificent 7
Bubbles
Scam Ads Make Up 10% of Revenue (Grrrr)
OpenAI Google Meta Microsoft X-AI Oracle
Tesla Vision vs. Waymo LiDAR
A Winning Magnificent 7 Strategy
 
And here is more information on each topic.
 
The Magnificent 7
As I mentioned in my performance blog last week, the Magnificent 7 was still leading the S&P500 to new highs in 2025. However, these companies were not the top performers. It was all about silver, gold, Peru and clean energy.  Click on the blue highlighted words to read my 2025 Performance blog.

So, what is going on with the Magnificent 7? Are the companies just not as exciting as we thought they were? All the companies have an AI play, and are leading the pack in technological breakthroughs, including quantum computing, robotaxis and productivity. With the exception of Apple, the companies all have double-digit year over year sales growth, and with the exception of Tesla, double-digit profit margins. If we think of these mega corporations in the real world, chances are we’re coming into contact with their products constantly throughout the day. How many Tesla vehicles do you see on the road? Have you taken a robotaxi anywhere? Have you used AI to help you create a presentation or even grammar-check an email? Are you still conducting your business on Microsoft Word and Excel documents, and searching on Google? Are you active on Instagram? Receiving deliveries from Amazon? The companies have in-demand products and are profitable. The problem lies more in the price of the stock.
Email [email protected] if you would like updated AI and the Magnificent 7 stock report cards.
 
Bubbles
There’s one word that comes up frequently when the Magnificent 7 heads south – bubble. Retail investors have gotten so excited about the prospects of AI that they have forgotten completely about the old adage, buy low, sell high. We just want to own it at any price thinking that if we buy and hold long enough, we’ll get rich. Tesla has a $1.6 trillion market value, but only $7 billion in net income. 2025 might see less revenue and net profit than 2024 for Tesla. The company is on track to earn under $5 billion this year. EV price wars, Chinese EV competition and the expiration of the EV tax credit are all weighing on the company’s growth and margins.
 
Tesla’s price-earnings ratio is the most outlandish at 324. However, all the Magnificent 7 companies have very elevated prices. The shares are selling for what people think they’ll be worth years from now. So, if there’s any sign that the road will not be smooth going forward, the whales of Wall Street want to take the money and run, and we get outsized corrections in a very short period of time.
 
Scam Ads Make Up 10% of Revenue (Grrrr)
Reuters blew the lid on a very alarming business practice. According to internal Meta documents reviewed by Reuters, the company projected that 10% of its 2024 total annual revenue, or approximately $16 billion, came from scams or banned goods.
 
Several class action lawsuits have been filed and 42 U.S. state attorney generals urged Meta to take action against “investment scam ads” in June 2025. US senators Josh Howley and Richard Blumenthal have demanded a federal investigation into the Meta scam ad problem by the FTC and SEC. These are the kinds of things that could alarm investors, especially if any investigation is announced, which could cause a very rapid decline in Meta’s share price. Meta’s price-earnings ratio is also elevated, but not as egregious as Tesla’s. Meta made $62 billion in 2024 with a market cap of $1.64 trillion.

The questionable business practice isn’t limited to Meta. I listen to a lot of music on YouTube, while working out. It’s not uncommon to see an AI-generated Oprah pushing a Himalayan Sea salt remedy, or a questionable workshop on investing that gets 1-star from Trust Pilot. A simple search on Google‘s own platform asking AI whether the ads are scams usually reveals the truth. So, it doesn’t seem like it’s that difficult to vet. Many of the same ads plague msn.com as well, which is owned by Microsoft. If you’re visiting these sites, be very careful. It’s astonishing that so many outright fraudulent companies are allowed to bait and phish on these platforms.
 
OpenAI Google Meta Microsoft X-AI Oracle and Nvidia
Have you used ChatGPT? Meta AI? Grok? While you may not be using an Nvidia app, you certainly know the name and are likely using a chip. Oracle has been making headlines because they’re building data centers and ran into some funding snags, due to the amount of debt that the company has. Oracle’s share price soared to $309 on Sept. 19, 2025, after they announced a deal with OpenAI (ChatGPT). By Dec. 17, 2025, the share price had plunged by -48%, to just $180/share. Oracle has a BBB credit rating (S&P Global) with a negative outlook (at the lowest rung of investment grade). Be very careful of investing on AI headlines.
 
Each one of the AI user applications has its own area of expertise. As an example, I use Meta AI when I’m creating a graphic, Google AI when I’m fact-checking, and Grok when I am putting together a PowerPoint presentation. I certainly know a great deal of ChatGPT devotees – some of whom consider the app to be a “friend.” As Alexis Ohanian is fond of saying, artificial intelligence will not take your job. However, a person who is using artificial intelligence will. An Executive Summary that might have taken days for me to perfect was efficiently achieved with the support of AI in just a few hours. (AI didn’t create the content. It just organized it well, which made it quite easy to edit and beautify.)
 
Artificial intelligence is an innovation that is rapidly becoming mainstream. The question really is can it be profitable? Companies that have been around for quite a while, including the Magnificent 7 make money. Newer enterprises, such as ChatGPT and X-AI are burning through cash, with at least $12 billion in losses per company in 2025. So far, OpenAI and X-AI have had no trouble raising money and getting extremely high valuations at $500 billion and $230 billion, respectively.
 
However, it is important to factor in an important and well-tested economic theory that played into the Dot Com Crash – Peter Schumpeter’s Theory of Creative Destruction. In the 1st phase of disruptive technology, the new companies soar in valuations, even the newcomers who will fail to compete. Then a crash occurs. The weaker businesses will fail. However, even the survivors will suffer. The NASDAQ Composite Index dropped -78% between the Dot Com highs in March 2000 and the lows in October of 2022. The index took 15 years to recover.
 

Source: MSN.com. (c) Microsoft. Used with permission.

There are time-proven ways to invest in these exciting and profitable innovations, while also protecting ourselves from the crash and restructuring. (Keep reading.)
 
Tesla Vision vs. Waymo LiDAR
Robotaxis and robot technology are some of the reasons why Tesla shares are so expensive. One of the concerns, especially for the full self-driving, is that Tesla relies on cameras only and is not incorporating LiDAR. Be sure to read my Tesla Vision vs. Waymo LiDAR blog, where you can watch a former NASA engineer do a side-by-side test live. It’s very entertaining and informative.
 
We’ve also seen investors and even consumers have very strong feelings about Elon Musk. Tesla is another stock that you could have purchased at a discount of about 40% just a few months ago.
 
The strategy below helps to smooth out the volatility that is inherent in the Magnificent 7 companies, while staying on the right side of the trade.
 
A Winning Magnificent 7 Strategy
One of the most important strategies for all at-risk investments, including stocks, funds and target date retirement funds, is to have an age-appropriate, properly diversified plan that we rebalance 1-3 times a year. That may sound like a lot of work. However, it is less time and less money than most of us spend worrying about our nest egg, once we learn the life math that we all should have received in high school. It’s important for us to be the boss of our money because most managed plans do what the market does. That means that you’re exposed to losses in corrections (such as happened in 2022), while experiencing paper losses on the safe side (where your principal is supposed to remain intact) in today’s Debt World. As I reported in our 2025 Performance blog, those who are using our strategies are in the hottest funds on Wall Street, and have no paper losses, while earning a competitive income on the safe side. This isn’t difficult or time-consuming. It’s actually as easy as a pie chart.
 
You can read about these strategies in my books, and you can learn and implement them at our online Financial Freedom Retreat. You can also receive an unbiased second opinion from me through my private coaching. Email [email protected] to learn more now. Visit the https://www.nataliepace.com website for additional information on the retreat and books.
 
FYI: if you do not have large cap growth, then you are not experiencing the massive performance of the Magnificent 7. We have been overweighting into AI and breakthrough technology in our hot slices. As I mentioned in my 2025 Performance blog of last week, the real gains this year have been in silver, Peru and clean energy. Click over to read that blog.
 
Bottom Line
AI is here to stay. However, it is in the first phase of the cycle, which could be the bubblelicious phase. The way to prosper without plummeting is to have a hot slice of AI and capture gains at the high, rather than investing blindly and perhaps buying high on headlines before a potential downturn or even crash. If you haven’t rebalanced your wealth plan in a year, now is the perfect time to do it, with stocks still very close to an all-time high. Email [email protected] to start your journey now.
 
 
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​Natalie Wynne Pace is an Advocate for Sustainability Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.