Sridhar Vembu Sees AI Market Bubble Growing as Nvidia, Apple, Microsoft Trade at Rich Valuations

Artificial intelligence stocks have fueled one of the biggest market rallies of 2026. NVIDIA, Apple, and Microsoft continue trading at massive valuations as investors pour billions into AI-focused companies. 

But on May 31, 2026, Zoho founder Sridhar Vembu warned that the market may be entering an “wild bubble,” comparing today’s AI excitement to the dot-com era. His comments have sparked fresh debate over whether the AI boom is built on real growth or rising speculation that could eventually trigger a sharp correction.

Why Sridhar Vembu Thinks the AI Boom Looks Dangerous?

“Even Bigger Than 1999”: The Viral Warning

On May 31, 2026, Zoho founder Sridhar Vembu warned that the current AI-driven stock rally looks like an “wild bubble” that may be bigger than the dot-com crash of 1999. His comments quickly went viral across financial media and social platforms. 

Vembu pointed to soaring valuations in major AI-focused technology companies and argued that prices are moving far ahead of business fundamentals. He also referenced former Sun Microsystems CEO Scott McNealy’s famous post-dot-com warning about unsustainable revenue multiples.

The Core Problem: Sky-High Price-to-Sales Ratios

Vembu highlighted valuation data that worried many investors. NVIDIA currently trades near 20 times sales, while Apple and Microsoft trade around 10 times sales. Alphabet stands near 11x sales, and Micron around 19x. These numbers are extremely high compared to historical market averages. Critics believe such valuations leave little room for mistakes or slower growth. 

However, supporters argue that today’s AI leaders generate massive profits, unlike many companies during the dot-com era.

Nvidia, Microsoft, and Apple Are Driving the AI Stock Rally

Why Is Nvidia Leading the AI Market Boom?

NVDA remains the biggest winner of the AI revolution. Demand for its AI chips and data-center hardware continues to surge in 2026. The company recently reported strong earnings growth and record profitability as cloud firms and AI startups aggressively invest in infrastructure. 

Nvidia is entering the PC market with a new chip aimed at loosening the stranglehold of Intel technology in that arena and modernizing the machines for the AI era https://t.co/OsyA9C4wi0

— Bloomberg (@business) June 1, 2026

Meyka’s AI stock analysis tool shows bullish momentum for Nvidia due to strong institutional demand and continued AI spending trends. Technical indicators also suggest long-term strength, although short-term volatility risks remain high.

Many Wall Street analysts still support Nvidia because of its dominant position in AI computing. Barron’s recently reported that Nvidia continues benefiting from strong data-center demand and its CUDA software advantage.

Why Investors Still Trust Big Tech?

Despite bubble concerns, investors continue buying companies like Apple and Microsoft because they generate huge cash flows and real profits. Apple recently reached record highs ahead of its AI-focused WWDC 2026 event. Analysts believe AI-powered Siri upgrades and stronger ecosystem integration could boost future revenue growth.

Microsoft also remains a major AI leader through Azure cloud and Copilot services. Many analysts argue that today’s AI market differs from 1999 because these firms already dominate profitable businesses.

What Makes the AI Bubble Debate Different From the Dot-Com Era?

Are Today’s AI Stocks Really Similar to 1999?

Some similarities clearly exist. Investors are pouring billions into AI companies. Semiconductor stocks have surged sharply in 2026, while AI startup valuations continue climbing fast. Market excitement and fear of missing out are also pushing prices higher.

Still, there are major differences. During the dot-com era, many companies generated little or no profit. Today’s AI giants produce billions in earnings every quarter. NVIDIA recently posted extremely strong margins and revenue growth, strengthening the bullish argument.

Risks That Could Burst the AI Rally

What Could Trigger a Market Correction?

Several risks could pressure AI stocks in the coming months:

• Slower enterprise AI adoption
• Weak earnings growth
• Rising government regulation
• Overspending on data centers
• Lower semiconductor demand

Investor Michael Burry recently warned that Nvidia’s growth could slow if AI infrastructure spending weakens. Some analysts also worry that companies are spending too aggressively without clear long-term returns. If growth slows, expensive valuations could fall quickly.

What Investors and Tech Leaders are Watching Next?

The next 12 months may decide whether the AI rally becomes a long-term revolution or another market bubble. Investors are closely tracking AI profitability, enterprise demand, and semiconductor sales growth. 

🚨 THE NEXT MARKET TEST IS NOT NVIDIA.

It is the jobs report.

U.S. stocks are sitting near record highs.

AI-linked tech is still pulling capital back into the market.

And investors are acting like the Fed risk has been contained.

But this week’s labor data could challenge… pic.twitter.com/ZXLVViSg6R

— Logan Weaver (@LogWeaver) May 31, 2026

Strong earnings from Nvidia, Microsoft, and Apple continue to support bullish sentiment for now. But if revenue growth slows, the market could face sharp volatility. The AI boom remains powerful, but valuation concerns are becoming harder for investors to ignore.

Final Words

The AI boom continues to drive massive gains for Nvidia, Apple, and Microsoft, but rising valuations are heightening bubble concerns. Sridhar Vembu’s warning highlights growing fears that investor excitement may be outpacing real fundamentals. While AI demand remains strong in 2026, the market’s long-term direction will depend on sustainable earnings growth and real business adoption.

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.