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What’s Next for AI and Crypto: Bubble or Buying Opportunity?

Markets delivered a jolt last week. After months of steady gains, stocks finally lost altitude and crypto fell even harder, bringing volatility back into the picture in a way investors have not felt since early spring.

But unlike April’s tariff-driven selloff, this downturn did not come with an obvious catalyst.

Instead, investors were left sifting through a wave of vague explanations. Headlines blamed “AI fatigue,” fading hopes for rate cuts, or renewed macro anxiety—but none of those narratives fully explain what happened.

What stood out most to us was how sentiment, positioning, and technical flows drove market action far more than any deterioration in fundamentals.

NVIDIA (NVDA) earnings were the week’s focal point—and the numbers were strong. The company once again demonstrated that the AI buildout remains intact and demand continues to exceed supply. Yet after a brief pop, NVDA and the broader market drifted lower anyway, underscoring how jumpy investors have become.

The tone finally shifted on Friday when New York Fed President John Williams signaled that monetary policy is now “modestly restrictive” and that there is “room for a further adjustment in the near term” to bring rates closer to neutral.

Markets welcomed that hint of flexibility, lifting risk assets into the weekend.

In our latest @76research LIVESTREAM, Trish and Rob break down what’s really going on beneath the surface—and how investors should view this latest wave of volatility across AI, crypto, and the broader market. WATCH!

Volatility returns

Last week delivered the kind of turbulence investors have not seen in a while. Stocks slid early, then bounced late. Crypto dropped sharply. Headlines filled up with warnings about bubbles, politics, and the Federal Reserve.

As we see it, after a strong year, many investors simply have decided to take profits and step aside.

It is particularly notable that the S&P 500 peaked a couple of day prior to the last day of October, the cut-off date for the majority of stock mutual funds.

This could have created extra buying pressure that later reversed as fund managers tried to position themselves in the year’s best performing names—which tended to be the ones most aligned with the AI theme.

NVIDIA’s blowout quarter

The most important data point of the week came from NVDA—and it cut directly against the “AI bubble” narrative. NVDA reported another exceptional quarter and, more importantly, reaffirmed that demand remains well ahead of supply.

CEO Jensen Huang highlighted three long-term growth engines:

(1) The shift from CPUs to GPUs. This is perhaps the least understood driver, yet one that Jensen keeps emphasizing in almost every call. Even without generative AI, global computing is moving toward accelerated computing architectures—a once-in-a-generation hardware transition.

(2) Generative AI. Demand for AI training and inference continues to rise, and we are still early in understanding how much compute AI will ultimately consume.

(3) Physical AI. This includes robotics, 3D modeling, digital twins, industrial automation, and any AI that interacts with the physical world. This is barely contributing to revenue today but could become the biggest driver of all.

NVDA said it is sold out through next year. The AI build-out remains one of the strongest secular trends in modern investing.

This is not what bubbles look like. Actual bubbles burst because demand evaporates or was never really there in the first place.

NVDA’s challenge today is the opposite: it cannot build chips fast enough for customers who themselves cannot deliver enough AI compute capacity to meet growing end-user demand.

Technical factors drive crypto

Crypto’s sell-off has been much sharper than equities, with much of the move coming from internal market mechanics.

Key catalysts included a glitch at Binance, the largest global crypto custodian, that set off a chain of forced liquidations of leveraged positions beginning in October.

The weakness in crypto is a useful reminder that, despite increasing mainstream adoption, it is an inherently volatile and speculative asset class.

Long-term investors who can tolerate this degree of volatility should approach the asset class in a disciplined way.

This means having a clear sense of how much capital one may be prepared to commit, enduring downside volatility when it does arrive, and where possible adding to positions to take advantage of any weakness.

For more on crypto volatility, catch Trish’s recent interview with Eric Trump

Politics re-enters the market narrative

Markets may also be reacting to shifting political expectations. After the recent U.S. election cycle, prediction markets assigned higher odds to Democrats gaining ground in 2026.

Interestingly, the October peaks in Bitcoin and the S&P 500 aligned closely with the moment political betting markets shifted.

Because the Trump administration has aggressively supported both AI and crypto, outperformance by Democrats on Election Day potentially helped sour sentiment toward both themes.

Putting the pullback in perspective

Zooming out from this latest market drama, the environment remains favorable.  

Stocks have backed off their highest levels from October but are still outperforming long-term averages so far this year. The S&P 500 is up nearly 14% year-to-date, with the Nasdaq Composite gaining 16%.

NVDA—the most important player in the AI revolution—delivered another stellar quarter. AI investment and demand do not appear to be faltering in any way.

The broader economy remains stable, with the most recent jobs report coming in better than expected. There is some upward pressure on unemployment, but further labor market weakness will only bolster the case for rate cuts.

Tech and crypto megatrends—AI, robotics, tokenization—continue to expand.

Markets go through phases. Traders thrive on turbulence; long-term investors can use it to their advantage.

Weeks like this feel uncomfortable… but they do not change the direction of the biggest technological and economic trends underway.

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