Worried About a Stock Market Bubble in 2026? Here's a Smarter Way to Prepare.

By Geoffrey Seiler – Mar 14, 2026 at 4:35PM ESTKey PointsThere is some worry that the AI infrastructure market could be headed toward a bubble.A reduction in AI data center spending will hurt some companies while helping others. That is why dollar-cost averaging into the Vanguard S&P 500 ETF could be your smartest move. With spending on artificial intelligence (AI) infrastructure set to reach new heights this year, it's not wrong to question if we are heading into bubble territory. After all, the five largest hyperscalers (owners of massive data centers) are set to spend more than $700 billion in capital expenditures (capex) on AI data centers alone in 2026. That's a massive amount of money that is more than the gross domestic product (GDP) of all but about 24 countries. If the AI infrastructure build-out slows, it is going to impact a lot of large companies, including the world's largest, Nvidia (NVDA 1.56%), which makes up over 7% of the S&P 500 index. Large cloud computing companies have already started to issue debt to support their spending plans, and with these investments now set to start pushing up or exceeding these companies' operating cash flow, this spending will eventually peak. If you lived through the dot-com bubble, that is not something you want to experience again. Image source: Getty Images. That said, the market today is certainly a lot different from what it was back then. The valuation of Nvidia, which is the backbone of the AI build-out, is very reasonable today, trading at a forward price-to-earnings (P/E) ratio of about 22. This is in stark contrast to Cisco Systems, which was the backbone of the internet infrastructure build-out and had a P/E of over 100. Meanwhile, Nvidia is just one piece of the puzzle. Many of the hyperscalers that are spending so much money on this capital expenditure (capex) are huge publicly traded companies, including Alphabet, Amazon, Microsoft, and Meta Platforms. If their spending ends up being front-end loaded and they are able to cut back on this capex in future years, then their stocks could actually benefit from reduced AI data center spending, as they return to generating huge free-cash-flow numbers. Stick with dollar-cost averaging into an S&P 500 ETF Even if the market is in an AI infrastructure spending bubble, which is certainly up for debate, I don't think it will tank the entire market, but instead shift its leadership. That is why I think dollar-cost averaging into an S&P 500 index fund like the Vanguard S&P 500 ETF (VOO 0.56%) is still the smartest move to make, even if you are worried about an AI bubble. ExpandNYSEMKT: VOOVanguard S&P 500 ETFToday's Change(-0.56%) $-3.41Current Price$609.09Key Data PointsDay's Range$608.25 - $618.3352wk Range$442.80 - $641.81Volume26M First, no one knows if the market is in an AI infrastructure bubble or not, and if it is, when it will end. If investors wait on the sidelines, they could miss years of gains. Second, some stocks should benefit from lower AI data center spending, and as a market-cap-weighted index, the S&P 500 will let new winners rise to the top, like it always does. Third, by dollar-cost averaging, you help take market timing out of the equation and build positions over time for the long term.Read NextMar 14, 2026 •By Stefon Walters2 No-Brainer Vanguard ETFs I Would Invest in Right NowMar 14, 2026 •By David Dierking3 Low Cost Vanguard ETFs That Make Retirement Investing EasierMar 14, 2026 •By Chris NeigerWant $1 Million in Retirement? 5 Simple Index Funds to Buy and Hold for Decades.Mar 12, 2026 •By Adria Cimino1 No-Brainer S&P 500 Vanguard ETF to Buy Right Now for Less Than $1,000Mar 11, 2026 •By Neil Patel3 Things Every Vanguard S&P 500 ETF Investor Needs to Know TodayMar 11, 2026 •By Adam LevyIs It Smart to Buy Stocks Right Now? Warren Buffett's Best Advice for Dealing With Market Uncertainty.About the AuthorGeoffrey Seiler is a contributing Motley Fool stock market analyst covering technology, consumer goods, healthcare, energy, and materials stocks. Prior to The Motley Fool, Geoffrey was a senior equity analyst at Raging Capital Management, a $600 million long-short hedge fund. He holds a bachelor’s degree in history from Haverford College.TMFFindProfitStocks MentionedVanguard S&P 500 ETFNYSEMKT: VOO$609.09(-0.56%)-$3.41NvidiaNASDAQ: NVDA$180.28(-1.56%)-$2.87*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.