AI Boom or Bubble Ahead as ASML Rides a China Crosswind

Wall Street’s enthusiasm for AI is starting to cool after months of record highs and massive investment flows. Analysts warn that valuations across the AI sector may have soared too far, with investors chasing growth at any price. While the technology’s long-term promise remains undeniable, the short-term frenzy echoes past speculative bubbles that ended in sharp corrections.

ASML’s strong third-quarter performance, driven by demand for advanced chips used in AI applications, contrasts with a cautious outlook for 2026. The company faces potential declines in orders from China—a key growth market—due to weaker local demand and export restrictions. This divergence highlights the fragile balance between AI’s explosive potential and macroeconomic headwinds.

The global AI investment rush continues unabated, but beneath the surface lies a growing unease. Tech giants and semiconductor firms benefit from the HYPE cycle, yet market veterans spot troubling parallels with historical boom-bust patterns. The coming quarters will test whether this is a sustainable revolution or another case of irrational exuberance.