Worried About an AI Bubble? These Tech Stocks Are Well-Suited to Survive an AI Bust.

Worried About an AI Bubble? These Tech Stocks Are Well-Suited to Survive an AI Bust.

Will Healy, The Motley Fool

Sat, August 15, 2026 at 7:35 PM GMT+3 5 min read

• NVDA -0.06%

The Shiller P/E ratio has reached 42, its highest level since the dot-com boom. This time, AI stocks have driven that metric to its highs. This has stoked fears that the cycle will repeat, leading to an AI bust.

Like the internet, AI is likely here to stay. Still, internet stocks endured the dot-com bust despite the industry's long-term successes. Thus, expecting the same thing to happen to AI stocks is a real concern.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

However, such events are nearly impossible to time, and those who sell out of the market to avoid a market downturn could also miss out on long-term gains.

Thus, the compromise may be to pivot toward tech stocks likely to survive such an event. Knowing that, these three should hold up well even if the dreaded AI bust occurs.

Alphabet

Google parent Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) missed the dot-com bust by waiting until 2004 to go public. However, the company has used AI since 2001, and thanks to its successes with Google Gemini, it has successfully responded to the competitive threat from ChatGPT.

Admittedly, this has come at a cost. It has raised its capital expenditures (capex) to the $195 billion to $205 billion range for 2026, up from $91 billion in 2025.

It has increased its liquidity to over $242 billion to get ahead of this spending, and long-term debt more than doubled to over $98 billion over the previous six months. Also, free cash flow, which excludes capex, is now $53 billion for the trailing 12 months, down from $67 billion one year ago.

Nonetheless, investors may notice that Alphabet may have become Berkshire Hathaway's next Apple. That interest may partially stem from the fact that its net cash from operating activities was $186 billion for the same period. Thus, even if its capex spending does not bear fruit, Alphabet should be able to service its loans.

Moreover, the stock trades at a P/E ratio of just 17. That should limit its downside in an AI bust, keeping investors safe and preparing them for a likely recovery in the AI sector.

Amazon

Amazon (NASDAQ: AMZN) was a dot-com-era darling that suffered a sell-off exceeding 90% after the boom ended. However, it emerged as an internet leader, using that strength to pivot into the cloud and eventually AI.

Today, Amazon has amassed around $123 billion in liquidity. It was also once a strong free cash flow generator, with $38 billion in annual free cash flow as recently as 2024.

Nonetheless, Amazon pledged $220 billion in capex for 2025, up from $132 billion in 2025. With that, free cash flow in Q2 has fallen to -$7.6 billion over the trailing 12 months, and long-term debt is now almost $129 billion.

Fortunately, in Q2, it generated $161 billion in net cash from operating activities over the previous 12 months. That gives it latitude to pull back on capex and reduce its debt if its AI spending does not yield returns.

Finally, it sells at a 22 P/E ratio, a low level that would have seemed unthinkable a few years ago. That should limit its downside and set it up for a recovery should an AI bust occur.

Nvidia

Nvidia (NASDAQ: NVDA) attained the world's largest market value by pioneering the AI chip industry. This product has fueled the AI boom, and its dominance continues despite the emergence of competitors.

If the AI boom ends, Nvidia's problem will not be capex, which totaled just $6.6 billion over the previous 12 months. Instead, the concern with Nvidia is the charges of circular financing. Nvidia had invested in enterprises that are also customers, leaving investors wondering whether all of Nvidia's growth was real.

To ease that concern, Nvidia partnered with several prominent asset management firms to provide $500 billion in financing. While that could take some of the heat off Nvidia, it highlights the industry's dependence on outside financing.

Still, an AI bust would only hurt Nvidia if AI disappeared entirely, which is unlikely. Currently, Nvidia holds about $80 billion in liquidity and around $8.5 billion in total debt, which speaks to its stability. Moreover, it generated $119 billion in free cash flow over the last 12 months.

Considering its 34 P/E ratio, any downside is likely to be limited and temporary.

Should you buy stock in Alphabet right now?

Before you buy stock in Alphabet, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $421,511!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,381,960!*

That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul.

See the 10 stocks »

*Stock Advisor returns as of August 15, 2026.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy.

Worried About an AI Bubble? These Tech Stocks Are Well-Suited to Survive an AI Bust. was originally published by The Motley Fool