Artificial Intelligence - a bubble? Pt. 4

Dobromir Risov
4 days ago
5 min read

by Dobromir Risov, February 2026

Nasdaq: the stock exchange for tech companies like Microsoft or Nvidia (shutterstock).

Introduction

Part 4 contains summary aspects of the previous three parts on Artificial Intelligence investments. I further added more information on the earnings. I decided to write another part after reading more headlines Artificial intelligence. I chose a different angle today: from the perspective of relevancy for an investor. The headline catching my attention was: "the awakening – why now Artificial Intelligence (AI) reaches a new stage”. This headline contains a strong element of spirituality. Here I want to sharpen the attention of the individual investor on to the fundamentals – I would say the opposite of spirituality.

Main

History of Artificial Intelligence

The history of the idea and work on Artificial Intelligence is a long one. Men started thinking about that concept in the Antique (Artificial Intelligence - a bubble? ). Work became more concrete in the 1950s. A workshop in 1956 at the University of Dartmouth according to Wikipedia served as an important kick-off point. What followed were a lot financial resources spent on developing Artificial Intelligence, mostly from governments. The United States and Japan were pioneer countries. Due to no significant breakthrough financing was stopped.

Nvidia

In part 1 Artificial Intelligence - a bubble? I presented in detail the prominent company Nvidia. According to financial news website Barron´s, Nvidia designs and produces chips and processors. Those are necessary to perform calculations, such as are done in the AI sector. When demand for faster calculations comes up, companies like Nvidia benefit from that. Nvidia is a very important but not the sole supplier to Artificial Intelligence companies like Open AI.

To the left I provide an important financial fundamental: this is the Earnings per Share for the last three reporting years. The earnings of a company are an important ratio when you consider buying a stock. The Earnings per Share have gone up by 1400% from 2023 to 2025! The company did very well in the past to say the least. Whether the future earnings are going to stay as high or go even higher is to be seen. Another key ratio offering more insight is the Earnings Yield: buying at the current price, the earnings yield is at 1,6%. That´s very little for an investor.

Open AI

I presented Open AI in more detail in Artificial Intelligence - a bubble? pt.2. Open AI is a young company, founded in 2015. Open AI offers a core product in the sector of Artificial Intelligence: Chat GPT, which is a large language model. There are a couple of other products from different companies offering an alternative large language model. When I look at the financial fundamentals I see Open AI has not been profitable since its foundation. The company resembles a start up business: A start up is a company which needs external funding to keep business running. The company needs yet to offer a profitable product. That in turn makes external funding not necessary anymore. According to startups.com, it takes a start-up business on average 4 years to become profitable. In an article from online site Intelectium I read, it takes between 2 and 5 years to turn in a profit. Open AI is late in becoming profitable.

Microsoft

I presented Microsoft in detail in this blog: Artificial Intelligence - a bubble? Pt. 3. The company is well established. Its foundation goes back to the 1970s. Microsoft has today a diversified product portfolio. The company does have some exposure to the Artificial Intelligence sector: for once Microsoft holds a stake in Open AI. Microsoft also launched its own AI product – called Copilot. Microsoft is the company least dependent on AI compared with Open AI and Nvidia.

Microsoft chose an AI strategy which insulates the company from big losses when Artificial Intelligence remains a hype. If Artificial Intelligence becomes a business success, Microsoft still benefits. You can read more about it in part 3. Above are the Earnings per Share for the last three reporting years: By providing a longer term view, an individual investor sees the volatility in earnings. The earnings per share have been going up during the last three years: from 2023 to 2025, earnings have gone up by around 40%. The earnings yield for 2025, is at 3.5% when you buy the stock for 399 $. That is an o.k level.

Summary

Often in the news there is talk about the Artificial Intelligence sector these days: news of the "next stage" or about a change in management. Remember the core Artificial Intelligence product remains hugely loss making for Open AI. This is a good example for the difference between daily news and the fundamentals for a good investment. Also note that a supplier to Open AI, like Nvidia is doing very well business wise. The lighthouse picture stands for the financial fundamentals to guide an individual investor in the decision making.

A lighthouse in Northern Spain (shutter stock).

By showing the earnings history for the three years I encourage the individual investor to look beyond the next quarter and the daily news. While the core AI product could turn profitable someday, the history of Artificial Intelligence is one of huge investments and expectations and of disappointments. Finally doing company analysis similar to what I did here is time consuming. I advise individual investors to focus on asset classes. Check out my personal investment course Courses (List) when you want to know more.

Frequently Asked Questions (FAQ)

1. What is important for an individual investor regards AI? Individual investor must know companies have different exposure to AI. For some it is small, like Microsoft. For others like Nvidia or Open AI, the exposure is very large, even existential.

2. How relevant are daily news for an individual investor? An investor must know what his criteria for investing are. When an investor focuses on fundamentals rather than on hype, daily news become irrelevant.

3. Is Open AI a good investment? The company is private, so it is very difficult to buy stock. And it is still in a start up stage. This stage is characterised by the need for ongoing external funding as the company has not reached profitability to finance its own operations. It offers no return at this stage.

4. Is Nvidia´s business performance sustainable? Its earnings growth has been fantastic over the last three years. Nvidia´s business thrives a lot on supplying the Artificial Intelligence sector. When demand there drops, Nvidia earnings are likely to drop too. And that has a negative impact on the stock price.