AI - Ain't A Bubble (Yet)

The volatility view

Given the parabolic price move in NVDA and the "larger than life" stories on how AI will change the world, it is of course reasonable to question if we are in a bubble. It is of course true that much of the recent market gains are down to excess liquidity that was begotten by the massive pandemic stimulus and that excess liquidity always has a "bubble-feel" to it. However, many other aspects of the market do not support that we are in a bubble. Today's note focuses on the view from the derivatives markets as represented by the excellent volatility team at BofA.