AI bubble vs. supply shortage: Silver may present a buying opportunity.
2026-02-26 21:37:42
On Thursday (February 26), during the Asian and European sessions, spot silver began to fall at a key geopolitical juncture in the US-Iran negotiations. The market is betting that the negotiations will move in the direction of geopolitical easing. Currently, it is down 2.44% and trading at $86.89 per ounce. This is one of the reasons for the decline in silver. This article focuses on another reason for the decline in silver and the investment opportunities it brings.
Silver began a historic surge in 2025, rising from about $31 per ounce at the beginning of the year to a record high of $115 per ounce in January 2026.
This round of concentrated selling is mainly due to the suppression of silver demand by high prices, as well as the market's temporary risk aversion sentiment in response to the AI boom. Over the past year, the AI trend has been driving up silver prices.
Besides the fact that the precious metals market correction was priced in in advance for the easing of geopolitical conflicts, there is another pricing logic for silver: US tech stocks. Last night, Nvidia's better-than-expected earnings dispelled some market concerns about the AI narrative, and the three major US stock indexes collectively rebounded sharply.
The recent correction in US tech stocks has two main reasons. First, tech stocks have a strong substitution function for software applications such as drawing software and antivirus software. For example, AI replaced Photoshop, causing Adobe to plummet, and AI replaced programming languages to unify functions, causing Intel to plummet.
Another logic is that AI has not yet created a new profit model. Google still relies on advertising for profit. At the same time, concerns about energy mean that the expensive capital expenditures of technology companies cannot bring stable profits. This is the second layer of logic behind the recent sharp correction in technology stocks.
Returning to the market, yesterday Nvidia, a behemoth company, saw its net profit increase by a staggering 78%, yet its stock price failed to surge, ultimately rising by less than 2%. This suggests that although the equity market as a whole has rebounded significantly, market doubts about the sustainability of technology stock performance have not disappeared.
Finally, the impact spread to Asia, with the Hang Seng Tech Index and Hang Seng Index in Hong Kong experiencing significant declines during the Asian and European sessions. The precious metals market also had to bet that US stocks might also adjust tonight, giving back yesterday's gains, so silver fell in advance.
Experts at AmplifyETFs pointed out that despite the recent sharp increase in volatility, retail investor sentiment has remained stable, with no emotional breakdown or panic selling.
During the sharp drop in silver prices last month, buyers on the Amplify platform actively entered the market during the first phase of the decline, forming an active two-way trading pattern around $70/ounce, and the inflow of funds into related products has remained positive since the beginning of the year.
Historically, silver typically lags behind gold in the early stages of a precious metals rally, but then catches up quickly in the short term. Regardless of whether it rises or falls, silver is prone to accelerated fluctuations, a characteristic that was fully demonstrated in January when silver prices hit a record high.
The market is currently in a price discovery phase after a rapid rise. Institutions believe that silver prices will not break through immediately, but will instead enter a bottoming range of $70-80 per ounce. After the speculative frenzy cools down, the market will gradually seek a new equilibrium.
The core fundamentals supporting the rise in silver prices have not changed due to the short-term correction; the tight supply and strong demand remain a solid foundation.
On the supply side, silver mining output has long been unable to keep up with demand growth, and structural supply shortages persist. On the demand side, silver, as an excellent conductor, is a core raw material required for the expansion of AI data centers. By 2025, global supercomputing giants will invest at least $625 billion in AI infrastructure. At the same time, there is also extensive industrial demand in fields such as photovoltaics, new energy vehicles, and electronic components.
In addition, silver also has investment attributes: geopolitical uncertainty drives up demand for safe-haven assets, coupled with the global trend of de-dollarization, which together provide support for investment.
The institution believes that the two pillars of industrial demand plus supply gap and safe-haven demand plus de-dollarization still make the long-term bullish logic for silver still valid.
The silver market is much smaller than the gold market, but its volatility has always been higher. Even marginal changes in market sentiment can trigger violent fluctuations, which is the most fundamental characteristic of silver trading.
Meanwhile, if the AI sector as a whole undergoes a correction, it will drag silver down with it. At this point, a contradiction will emerge: the certainty of capital expenditures by technology stocks and power companies coexists with the market's uncertainty about the long-term performance of AI companies, creating a price scissors effect.
The certainty of precious metal purchases means that the precious metal spot market will still face a supply shortage for several years, while the heavy capital expenditure of AI companies will lead to poor performance and accelerate the adjustment of the equity market. This will cause silver prices to overshoot, but the spot market has both rigid demand and supply. This will cause silver to fall and create a golden opportunity. If this happens, it will be a very good trading opportunity.
From a technical perspective, spot silver is consolidating near the upper edge of its trading range, currently finding support around the 5-day moving average. The key price levels remain at 30, 50, 70, and 90.
(Spot silver daily chart, source: EasyForex)
At 21:35 Beijing time, spot silver was trading at $80.04 per ounce.
Silver began a historic surge in 2025, rising from about $31 per ounce at the beginning of the year to a record high of $115 per ounce in January 2026.
This round of concentrated selling is mainly due to the suppression of silver demand by high prices, as well as the market's temporary risk aversion sentiment in response to the AI boom. Over the past year, the AI trend has been driving up silver prices.
Silver's pullback is partly due to geopolitical factors and also reflects pricing in AI technology stocks.
Besides the fact that the precious metals market correction was priced in in advance for the easing of geopolitical conflicts, there is another pricing logic for silver: US tech stocks. Last night, Nvidia's better-than-expected earnings dispelled some market concerns about the AI narrative, and the three major US stock indexes collectively rebounded sharply.
The recent correction in US tech stocks has two main reasons. First, tech stocks have a strong substitution function for software applications such as drawing software and antivirus software. For example, AI replaced Photoshop, causing Adobe to plummet, and AI replaced programming languages to unify functions, causing Intel to plummet.
Another logic is that AI has not yet created a new profit model. Google still relies on advertising for profit. At the same time, concerns about energy mean that the expensive capital expenditures of technology companies cannot bring stable profits. This is the second layer of logic behind the recent sharp correction in technology stocks.
Returning to the market, yesterday Nvidia, a behemoth company, saw its net profit increase by a staggering 78%, yet its stock price failed to surge, ultimately rising by less than 2%. This suggests that although the equity market as a whole has rebounded significantly, market doubts about the sustainability of technology stock performance have not disappeared.
Finally, the impact spread to Asia, with the Hang Seng Tech Index and Hang Seng Index in Hong Kong experiencing significant declines during the Asian and European sessions. The precious metals market also had to bet that US stocks might also adjust tonight, giving back yesterday's gains, so silver fell in advance.
Institutional signals: Retail investors are not panicking; pullbacks are met with active buying.
Experts at AmplifyETFs pointed out that despite the recent sharp increase in volatility, retail investor sentiment has remained stable, with no emotional breakdown or panic selling.
During the sharp drop in silver prices last month, buyers on the Amplify platform actively entered the market during the first phase of the decline, forming an active two-way trading pattern around $70/ounce, and the inflow of funds into related products has remained positive since the beginning of the year.
Historically, silver typically lags behind gold in the early stages of a precious metals rally, but then catches up quickly in the short term. Regardless of whether it rises or falls, silver is prone to accelerated fluctuations, a characteristic that was fully demonstrated in January when silver prices hit a record high.
The market is currently in a price discovery phase after a rapid rise. Institutions believe that silver prices will not break through immediately, but will instead enter a bottoming range of $70-80 per ounce. After the speculative frenzy cools down, the market will gradually seek a new equilibrium.
Core support: Solid supply and demand fundamentals, with a long-term bullish outlook supported by two key factors.
The core fundamentals supporting the rise in silver prices have not changed due to the short-term correction; the tight supply and strong demand remain a solid foundation.
On the supply side, silver mining output has long been unable to keep up with demand growth, and structural supply shortages persist. On the demand side, silver, as an excellent conductor, is a core raw material required for the expansion of AI data centers. By 2025, global supercomputing giants will invest at least $625 billion in AI infrastructure. At the same time, there is also extensive industrial demand in fields such as photovoltaics, new energy vehicles, and electronic components.
In addition, silver also has investment attributes: geopolitical uncertainty drives up demand for safe-haven assets, coupled with the global trend of de-dollarization, which together provide support for investment.
The institution believes that the two pillars of industrial demand plus supply gap and safe-haven demand plus de-dollarization still make the long-term bullish logic for silver still valid.
Summary and Technical Analysis:
The silver market is much smaller than the gold market, but its volatility has always been higher. Even marginal changes in market sentiment can trigger violent fluctuations, which is the most fundamental characteristic of silver trading.
Meanwhile, if the AI sector as a whole undergoes a correction, it will drag silver down with it. At this point, a contradiction will emerge: the certainty of capital expenditures by technology stocks and power companies coexists with the market's uncertainty about the long-term performance of AI companies, creating a price scissors effect.
The certainty of precious metal purchases means that the precious metal spot market will still face a supply shortage for several years, while the heavy capital expenditure of AI companies will lead to poor performance and accelerate the adjustment of the equity market. This will cause silver prices to overshoot, but the spot market has both rigid demand and supply. This will cause silver to fall and create a golden opportunity. If this happens, it will be a very good trading opportunity.
From a technical perspective, spot silver is consolidating near the upper edge of its trading range, currently finding support around the 5-day moving average. The key price levels remain at 30, 50, 70, and 90.
(Spot silver daily chart, source: EasyForex)
At 21:35 Beijing time, spot silver was trading at $80.04 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
