Is the AI bubble bursting?

Boom or bust?

Recent volatility has roiled global markets as fears around NVIDIA– the world’s most valuable company – reignited investor caution.

Despite posting robust growth, investors pressed the sell button on NVIDIA and stocks in general, amid fears of an artificial intelligence (AI) bubble, stretched valuations and geopolitical risks.

United States (US) stocks recorded their sharpest intraday swings in months. The S&P 500 slid nearly 2% over the course of last week and is now down 3.5% for November, while the tech-heavy Nasdaq 100 has fallen more than 6% in November, marking its steepest three-week drop since April.

MSCI Asian Pacific Index versus MSCI All-Country World Index

Asian stocks also tumbled, while the Australia 200 (ASX 200) is on track for its worst November in over three years. 

Analysts are divided as to whether this is a correction or the start of a deeper bust.

ASX 200 cash chart

Diana Mousina, AMP senior economist, highlights that while the US tech sector has many ‘bubble-like’ characteristics, there is still further upside for tech earnings given AI adoption is still in its early stages. 

Meanwhile, Morgan Stanley has upgraded its S&P 500 target to 7800, seeing roughly 15% upside potential and the beginning of a multi-year earnings upswing.

Possible global asset bubbles 

Buying opportunity

So, if markets have further room to run, where should investors be looking?

Joel Fleming from Yarra Capital Management thinks 2026 will be the year for small to micro-cap stocks. 

SKS Technologies Group (ASX:SKS)

Fleming highlightsSKS Technologies Group as one of the stocks he sees as well positioned. It has risen almost 96% over the past 12 months and analysts see it poised for further growth, supported by a substantial pipeline of data centre projects.

SKS Technologies Group daily candlestick chart

Morgans expects the company’s revenue to rise to $320 million and has lifted its price target for SKS to $4.25 from $3.80, signalling an expected upside of roughly 11%.

The average recommendation is a ‘strong buy’ according to Refinitiv, with a $4.17 price target, suggesting a gain of around 9%.

SKS Technologies Group historical trends and price targets

Meanwhile, Morningstar is predicting upside for retailers and the supermarket giants as cost-of-living pressures abate and in the lead-up to Christmas. Morningstar analyst Johannes Faul told ausbiz we are in a ‘normalised’ interest rate environment, which should send consumers to the shops.

Accent Group (ASX:AX1)

Accent Group shares have fallen close to 60% over the past 12 months and appear to be in a long-term bearish trend. The 200-day moving average (MA) is falling, suggesting demand for the stock is low and a signal investors see little opportunity in owning the stock longer term.  

Accent Group daily candlestick chart

Citi has recently updated the stock to a ‘buy’ with a bullish $1.83 price target, suggesting a 91% upside. But Morgan Stanley analysts see the stock falling even further to $0.95.

Accent Group buy/sell indicators and analyst projections

Buyer beware

Dean Fergie from Cyan Investment Management is also of the view that some companies are too richly valued in the current environment, suggesting there could be a further 20%–30% pullback. Heath Moss from HLM Investments is also cautious heading into 2026.