Speculative Bubbles in Artificial Intelligence Investments: Analysis of the “Magnificent Seven” Technology Stocks and Volatility Spillover Effects

Authors : Volkan Eteman

Pages : 198-220

Doi:10.56668/jefr.1574019

View : 18 | Download : 21

Publication Date : 2024-12-24

Article Type : Research Paper

Abstract :This paper comprehensively analyzes the speculative bubble risks of investments in artificial intelligence (AI) technologies in financial markets. A GSADF test and volatility spillover analysis on the stocks of the so-called “Magnificent Seven,” namely Meta, Microsoft, Apple, Amazon, Google, Nvidia, and Tesla is conducted. The test results reveal significant bubbles, especially in Nvidia and Tesla stocks, and these bubbles spread volatility to other technology stocks. The fact that Nvidia plays a central role in volatility spillovers suggests that overpricing in AI investments can create a domino effect across the sector, leading to severe volatility in global markets. Investors should diversify portfolios and adopt long-term strategies against speculative bubble risks. At the same time, policymakers should increase market efficiency by tightening financial regulations.
Keywords : Spekülatif Balonlar, Frekans Bağlantısı, Teknoloji Hisseleri, GSADF Testi