Empirical Research Confirms Iconic AI Bubble!

My methodology since 1977 has been to conduct empirical research to find causes for extreme current and historical events.  Strategies and algorithms are then constructed to predict next event.  The methodology, which led to my predicting the declines in the table below, was utilized to research of the iconic bubbles that have impacted the markets since the 19th century:

• Railroad
• Internet

My research that was conducted in January and February of 2026 led to my concluding that AI (artificial intelligence)  has caused a global equities markets bubble.  However, AI itself is not ICONIC.  Unlike the railroad and the Internet, AI is not a revenue generator.  It enhances the productivity of existing technology.  The railroad and the internet exponentially grew the global economy.   

AI’s transformational impact is comparable to the transistor (1947) and the semiconductor (1958).  Both of the 20th Century’s technological achievements enhanced the benefits of and lowered the cost of consumer products:

• Radio
• Television
• Computer

Given that AI is not transformational and is limited to increasing profit margins NVIDIA does not deserve to the world’s most valuable company.  It began its life as a semiconductor company.  Like all semiconductor companies and their microchip breakthroughs the result will be the same for NVIDIA, “extreme volatility”.   Since the chip was developed by Texas Instruments in ______ the semiconductor industry and the companies in it have had a volatile boom to bust history.  

The chart below depicts the post IPO share performance of Texas Instruments and Nvidia for the five years after their IPOs.  The chart depicts the extreme volatility for the shares of both of the semi-conductor companies.  Semiconductor shares are not ideal buy and hold investments.    

The chart below depicts Philadelphia Semiconductor Index (SOX) for the same 1999-2004 five year period as Nvidia in the above chart.  It confirms the industry’s extreme volatility.  

The ingrained volatility of the industry is due to its rapid development.  Gordon Moore, the co-founder of Intel, explained it succinctly when he created “Moore’s Law” which is known by all engineers and technologists.  Moore observed that the number of transistors on a microchip doubles approximately every two years, driving exponential growth in computing power and reducing costs. The law, which has ruled the semiconductor industry since 1965, forces developers to prepare for rapid obsolescence.  It’s the rationale for why the shares of semiconductor companies have ranked among the most volatile of all industries since the 1970s.

The huge problem that Nvidia has, and all of its customers and partners who have developed solutions utilizing its hardware also have, is that Spatial Intelligence (SI), the next generation of AI has arrived.  It’s why Nvidia recently invested along with Andreessen Horowitz and Advanced Micro Devices into World Labs, an early stage SI company founded by a Stanford University Professor Fei-Fei Li.  For more on Ms. Li, who many consider to be “the godmother of AI”, see my 09/17/24 report, “Spatial Intelligence (SI) … will Change Course of AI”.

The arrival of SI supports a thesis for Moore’s Law to be applicable to AI.  This poses a big dilemma for technology shares and the S&P 500 and NASDAQ indices.  Technology shares worldwide have been powered to all-time highs by Nvidia’s soon to be antiquated AI chips and technology.

Another problem that Nvidia and the other World Labs’ investors have is that it is not the leader of SI.  The leader is RYPPLZZ.  In Q4 of 2025, the company’s much more highly scalable technology passed a rigorous test which was monitored by the US FCC (Federal Communications Commission). The result is that RYPPLZZ will begin to generate billions of annual recurring surcharge revenue from the customers of the US’ mobile phone carriers in the near future.  For more on RYPPLZZ read “911 to Catapult RYPPLZZ to $10 billion by 2026”.  The video “New Tech (RYPPLZZ) to PRICK AI BUBBLE in 2026” that is available in the table below is also highly recommended.

The bottom line is that Nvidia was never meant to be in the buy and hold investment category.  It was born as a semi-conductor company and it will likely die as a semi-conductor company.

Instead, Wall Street anointed Nvidia as the world’s premier technology company.  Nvidia, a wild Zebra, was painted to transform it into a domesticated race horse. The wildest ever race horse provided the narrative which was needed to produce an iconic market bubble.

Wall Street’s NVDIA becoming the world’s most valuable company also resulted in the capital spending for AI to be breath taking.  The table below contains the trailing 12 months percentage changes for revenue and capital expenditures, at February 2026, for six of the Magnificent Seven’s members.  The significantly higher capex vs revenue percentage changes reflect the desperation that the the world’s largest technology companies have to develop new products and services to reverse their downward trending revenue growth momentum.

SI will be the cause of significant write downs for the Magnificent 7 members and for a majority of all technology companies.   Those, which will especially be crushed, are the ones which have spent mightily to develop and launch products and solutions that are powered by Nvidia’s prone to obsoletion chips and technology.  The set up provides the rationale for why the NASDAQ and S&P 500 could easily suffer 50% or more declines.  

The table below contains clips from the 2026 weekly Markowski on the Markets ZOOM sessions which contain the findings from my empirical research of the iconic bubbles.