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AI: a Good Investment or a Bubble?

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  • Dimitar Rafailov

    (Department of Finance, University of Economics - Varna, Bulgaria)

Abstract

Artificial Intelligence (AI) has considerable potential benefits for the companies that develop and implement it, but it may also contribute to the formation of a speculative bubble in financial markets. This study examines the performance of a portfolio of AI-related stocks during the period 2020-2024, with a focus on its return and risk. The investment in AI stocks has demonstrated relatively strong performance, with the risk-return ratio outperforming that of major market indices. Despite concerns about a potential AI bubble, no such phenomenon has been observed -while AI stock prices have experienced corrections, there have been no episodes of explosive growth followed by collapse.

Suggested Citation

  • Dimitar Rafailov, 2025. "AI: a Good Investment or a Bubble?," Financial Navigator Journal (selected edition), University of Economics Varna, issue 1, pages 69-78.
    • Handle: RePEc:vrn:cfinrd:y:2025:i:1:p:69-78
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