● AI Bubble Panic, Revenue Reigns
2025 Second Half Global Economy & Financial Markets Report: Sales Growth Comes Before AI Bubble Controversies
This article precisely covers three points.
1) Why fast-growing stocks are evaluated primarily by “30%+ sales growth” rather than “profit”.
2) An analysis of the illusion in PER and the misinterpretation of valuation, demonstrated by the cases of Spotify, Roblox, and Nvidia.
3) A sector map for structural growth from 2025 to 2027, a practical checklist, and warnings for potential bubbles.
Don’t miss opportunities by fearing bubbles.
Let’s verify using numbers and keep an eye on sales growth.
[News Briefing] “Is it a bubble, or the continuation of a liquidity-driven market?” – Key Takeaways
The core perspective is not “overvaluation” but “high growth”.
Structural growth stocks should be evaluated based on sales growth rates rather than profits.
A company showing annual sales growth of 20–30%+ over multiple years is considered a fast-growing stock.
Although Spotify, Roblox, and Nvidia may seem expensive when looking solely at PER, their fundamentals are boosted by sales.
Focus on the upward trend in sales and consensus upgrades rather than short-term stock price fluctuations.
Bubble concerns may look intimidating from a price perspective, but there are cases where profits increase faster than stock prices, thereby lowering valuation multiples.
In conclusion, whether “sales are fundamentally growing” is the most important investment criterion for the stock market in the second half of 2025.
Definition of Fast-Growing Stocks and the Three-Stage Profit Mechanism
Definition: Companies that maintain annual sales growth rates of 20–30%+ over several years and have the potential to reshape the market.
Stage 1 (Expansion): Sales increase and the business scale transforms.
Stage 2 (Profitability and Leverage): Operating leverage improves profit margins dramatically.
Stage 3 (Valuation Expansion): In the final stage, multiples may be applied, although this can represent a bonus or a distortion phase.
The true driver of long-term returns is the “jump in sales scale”.
Compounded annual growth of 30% can more than double in three years, and over 5–10 years creates a fundamentally different market capitalization.
Case Studies: Spotify, Roblox, Nvidia
Spotify: After structural adjustments and investments, sales led the way, with stock prices reacting strongly from the point of profit transition.
Initially overlooked by the market, its continuous sales growth led to a revaluation of its value.
Roblox: Despite still being unprofitable, strong indicators such as increasing MAU, Robux bookings, and the introduction of UGC and AI tools signal promising sales growth ahead.
As scale increases, operating leverage can enable a significant jump in profit transition.
Nvidia: Although concerns of overvaluation arose when considering PER alone, there were periods when profits grew faster than stock prices, reducing the multiple.
The essence of the AI infrastructure cycle is the simultaneous surge in sales and profits, a fundamental signal that distinguishes it from a bubble.
How to Diagnose Bubble Concerns Numerically
Beware of the PER illusion: If profits surge, even if stock prices rise, PER can decrease.
P/GP (Price-to-Gross Profit) is more useful than PSR.
Gross profit reflects structural competitiveness and pricing power.
Consensus Trends: Check if quarterly sales estimates are being revised upward.
The “persistence of upward revisions” distinguishes a bubble from a performance-driven market.
If the Rule of 40 (sales growth rate + operating margin) consistently exceeds 40, it indicates qualitative growth for software and platform stocks.
If RPO (Remaining Performance Obligations), NRR (Net Revenue Retention), and bookings/backlogs increase by 20%+ year-on-year, there is strong forward visibility in sales.
Structural Growth Sector Map 2025–2027
AI Infrastructure: GPU, HBM memory, CoWoS packaging, power/cooling infrastructure.
AI Platforms & Tooling: Model operations, vector databases, inference orchestration, security/governance.
AI Application: UGC in gaming (Roblox), music/audio commerce (Spotify), productivity & agent software.
Edge & Robotics: Industrial robots, autonomous driving stacks, on-device AI semiconductors.
Space & Communication: Benefits from satellite communications (LEO) combined with terrestrial networks amid surging global data transmission demand.
These sectors are not independent of global economic variables, but their fundamentals are explained by a structural shift in demand.
Even if the economic outlook suggests short-term slowdown, high-growth demand is likely to “outperform relatively”.
The Most Important Aspect That Other News Sources Often Overlook
Seven leading sales indicators for an “early view”.
– Whether the NRR is maintained at 120%+.
– The YoY growth trend of RPO, backlogs, and deferred revenue.
– Cohort sales expansion rates and churn rates for usage-based billing companies.
– Whether the gross profit margin is defensible at 60%+ (indicating pricing power).
– Whether S&M efficiency (Magic Number) improves to 0.7–1.0 or above.
– If Opex growth begins to lag behind sales growth, entering the “diops” phase.
– The timing of cash flow conversion: consecutive quarterly improvements in FCF margin.
Also, monitor the five “fake growth” warnings.
– Short-term sales spikes driven by large-scale promotions or rebates.
– When increases in inventory or receivables outpace sales growth.
– Performance inflated by non-core asset sales or one-off license revenue.
– Profits distorted by excessive capitalization of R&D expenses.
– Growth rates explained solely by exchange rate effects.
Valuation Tip: Use the EV/GP (Enterprise Value to Gross Profit) alongside growth rates in the G/PG (growth versus GP multiple) metric.
This indicator helps correct valuation illusions across both hardware and software.
Tactical Guide: Portfolio Construction and Risk Management
A three-layer strategy of Core-Sector-Options is recommended.
– Core 50%: Large fast-growing stocks (e.g., Nvidia chain, leader platforms) to secure market beta with low volatility.
– Sector 35%: Diversify across 2–3 themes such as AI tools, edge, HBM, and power infrastructure.
– Options 15%: High-risk early-stage fast-growing stocks like UGC, agent software, and satellite communications, managed with strict stop-loss and rule-based guidelines.
Rebalancing: Reduce weights if consensus sales are downward for two consecutive quarters; increase weights if they are upward for two consecutive quarters.
Hedging: Use index puts or sector spreads to defend during event risk periods (elections, FOMC meetings, major earnings announcements).
Cash Management: Maintaining a 10–20% cash cushion during periods of high volatility can improve the average purchase price.
Macroeconomic Scenarios and Catalysts
Interest Rates & Liquidity: As policy rate cuts are anticipated in the latter half of 2025, growth stock multiples become more favorable.
However, do not invest solely based on liquidity; focus on stocks that also show upward sales revisions.
Fiscal & CapEx: Increased investments in data centers and power grids in the U.S., Middle East, and Asia are key catalysts for upgrading AI infrastructure.
Supply Chain: Monitor the timelines for capacity expansion in HBM and advanced packaging.
Alleviating bottlenecks can trigger a domino effect in profit transitions as secondary beneficiaries emerge.
Risks: Overestimation of AI demand, regulatory tightening, geopolitical shocks, and surging power costs can lead to a re-rating of growth stocks.
Ultimately, the answer remains the same.
The persistence of upward sales revisions is the final benchmark.
Checklist: 10 Questions Before Buying
1) Can the company maintain a guidance of 20–30%+ sales growth for three consecutive years?
2) Has consensus sales been revised upward for the last 2–3 consecutive quarters?
3) Is the NRR at 120%+ or does cohort expansion remain robust?
4) Is the gross profit margin defense at 60%+ or on an upward trend?
5) Is the Opex growth rate lower than the sales growth rate?
6) Are RPO and deferred revenue growing faster than sales?
7) Are FCF margins showing improvement?
8) Considering EV/GP and growth rate, is the multiple reasonable compared to industry peers?
9) Is the competitive edge defensible by at least two of the following: technology, data, and ecosystem?
10) Is there a Plan B for regulatory and supply chain variables?
A Statement to Remember When Afraid of a Bubble
Bubbles occur when stock prices rise too quickly on their own.
The key focus should be on sales and profits that are growing even faster than stock prices.
Even amid economic uncertainty, the numbers in the financial markets do not lie.
Global economic fluctuations are inevitable, but companies with sustained sales growth will ultimately be rewarded in the stock market.
Ultimately, the best investment strategy is “to start with sales and finish with cash flow”.
For reference, this article does not recommend any specific stocks and is intended solely for educational market analysis.
Investment decisions and their outcomes are the sole responsibility of the investor.
Since the stock and financial markets are highly volatile, diversify and manage risks carefully.
< Summary >
Main Points: Fast-growing stocks are evaluated primarily by sales growth rather than profits.
The PER illusion is common, and when sales and profits grow quickly, multiples can actually decrease.
The cases of Spotify, Roblox, and Nvidia demonstrate this point.
The key sectors for 2025–2027 are AI infrastructure, tools, applications, edge, and satellite communications.
Use leading indicators such as NRR, RPO, and P/GP to get an early view, and manage risks with rebalancing rules.
The answer is simple.
Before worrying about a bubble, check whether sales growth continues.
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