New York, New York
— November 12, 2025

Two Bear Cases Emerging for AI and Big Tech

The AI boom has been one of the most powerful market stories of the past two years, driving massive gains across semiconductors, hyperscalers, and software names. But as we head deeper into Q4, its time to evaluate any cracks, or at least some warning sights that might be starting to appear.

At Wall Street Game Notes, we’re tracking two key bear cases coming out of Q3 earnings that could define the next leg of the AI cycle.

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1️⃣ CAPEX Runaway — Spending Without Clarity

AI infrastructure buildouts have reached extraordinary levels.
Every major player from Meta to Microsoft to Amazon is spending billions on data centers, GPUs, and power. But Wall Street is starting to ask the hard question: When does it all start to pay off?

For the last few quarters, markets rewarded aggressive CAPEX as a sign of leadership in the AI arms race. But that sentiment shifted recently after Meta’s Q3 earnings, where investors pulled back due to:

• CAPEX growth outpacing revenue growth
• Unclear ROI timelines on massive data center projects
• Guidance for even more aggressive spending next year

The lesson? Investors still want AI exposure but not at any price. They’re starting to draw a line between smart investment and runaway spending.

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2️⃣ Valuation Overload — Stocks Running Ahead of Earnings

The second bear case is valuation.
We’ve seen companies like Palantir report strong results, growing at tremendous levels but yet still sell off. Why? Because it’s reached a point where the stock has just run up too much and investors are feeling a bit tapped out.

At a roughly $450B market cap and just over $4B in expected 2025 revenue, Palantir’s is an expensive stock and just needs time for the earnings to close the gap before we would think about buying.

This dynamic isn’t limited to Palantir, a lot of the AI ecosystem is now exposed to this same overvaluation risk. The rally has been extraordinary, and we believe in the underlying tech but fundamentals need to catch up.

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Why This Matters

Meta and Palantir sent two clear signals:

• Meta shows the limits of how far investors will tolerate CAPEX growth.
• Palantir shows that valuation ceilings are real, even in a hype cycle.

Most companies in the AI and Big Tech space are exposed to at least one of these risks — either runaway spending or inflated valuation.

A slowdown might not be a bad thing. In fact, it could be exactly what’s needed for the next phase of sustainable, long-term growth.

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The Takeaway

Markets are adjusting and that’s healthy.
The AI boom isn’t over, but it’s evolving.
The next phase will favor clarity, execution, and profitability over hype.

We’ll continue watching these trends closely here at Wall Street Game Notes so make sure to stay tuned for more updates as we head toward NVIDIA’s upcoming report and the next wave of macro data.