NerdWallet’s Smart Money Podcast

Episode Summary: “AI Stocks May Be in a Bubble, and Car Prices Could Rise Soon — Here’s What to Know”

Date: September 11, 2025
Hosts: Sean Pyles, CFP®, and Elizabeth Ayoola
Guests: Anna Helhosky (NerdWallet News), Sam Taub (NerdWallet Investing Writer), Shannon Bradbury (Car Buying Nerd)

Overview

In this episode, the NerdWallet Smart Money team answers two pressing financial questions:

1. Are AI stocks in a bubble, and how should investors think about tech valuations today?
2. Is now the right time to buy a car, and what’s the best way to finance it?

The hosts break down why AI stocks like Nvidia are soaring, examine whether this hype is sustainable, and offer strategies to diversify your investments. In the second half, the Nerds answer a listener’s car financing question, tackling modern car prices, the impact of tariffs, negotiating tips, and loan strategies for buying a used vehicle, especially as prices may rise further in 2025.

Key Discussion Points & Insights

1. AI Stock Bubble: Are We There Yet?

(Segment starts: 02:31)

How Big is the AI Boom?

• Sam Taub: “AI excitement has driven a number of tech stocks to really dizzying highs, perhaps none more so than Nvidia. Nvidia is now worth more than $4 trillion… bigger than the United Kingdom, actually.” [03:13]
• Recent public concerns include OpenAI CEO Sam Altman’s warning that the situation echoes the dot-com bubble—stock prices surging ahead of business fundamentals. [03:54]

Comparing AI to the Dot-Com Bubble

• “In the late 90s, investors were pouring a ton of money into Internet companies… The Nasdaq lost 75% of its value, venture capital dried up, and millions of tech workers lost their jobs.” – Anna Helhosky [04:03]
• An MIT report found that 95% of companies experimenting with generative AI are seeing “zero return on that investment.” [05:11]

Dissenting Voices & Nuance

• Sam Taub: “Analysts from Goldman Sachs and Wedbush… say the valuations of these tech companies may be justified by structural shifts in the economy due to AI—that we’re still in the early days of the AI revolution.” [05:45]

Market Signals: How Overvalued is Tech?

• Analysts monitor price-to-earnings (P/E) ratios of the Nasdaq 100.
  • “[P/E] is not quite as high as it was during the dot-com bubble.” [06:13]
  • The Nasdaq is at all-time highs, but growth isn’t as explosive as the late ‘90s.

If There Is a Bubble: What Does it Mean?

• Even after a potential correction, AI’s underlying value could persist.
  • “Even if we have a big correction in AI stocks… that does not mean that AI is bogus… The Internet… had real value. People just got a little bit carried away in the 90s.” – Sam Taub [07:20, 08:03]
  • Pets.com may have failed in the dot-com bust, but the same idea now powers Chewy and other online pet supply retailers. [08:26]

How Exposed are Regular Investors to AI?

• “Nvidia alone is about 8% of the S&P 500 index… The top seven companies in the S&P 500, all of which are somewhat AI-related, make up about a third of the index.” – Sam Taub [09:22]

Portfolio Protection Strategies

• Diversification remains key.
  • “It doesn’t just mean buying an index fund—it means hedging with other types of assets like bonds.”
  • On “lazy portfolios”: “Sometimes just having a US stock index fund, a bond index fund, and an international stock index fund can be an easy way to introduce a little more diversity into your portfolio…” [10:04]
• Robo advisors can help. NerdWallet has a roundup of the best robo advisors and portfolio strategies. [11:37]

Notable Quote

“Often when it comes to tech bubbles… it’s not that the technology is all smoke and mirrors. These bubbles sometimes form and then burst because investors were a little too hasty to throw money into these things. But it could still have very real value.”
— Sam Taub [08:26]

2. Car Buying in 2025: Prices, Tariffs, and Smart Financing

(Segment starts: 13:29)

The Current Car Market

• Supply chain issues from 2020 (COVID, chips) created shortages and price spikes.
• Shannon Bradbury: “Inventory levels seemed to be stabilizing… but prices did not drop significantly. They have been stable all year at about $48,000, $49,000, which is well above what they were five years ago.” [14:04]

Tariffs: What’s the Impact?

• Carmakers are absorbing some tariff costs but reporting billions of dollars in losses. If tariffs remain, prices may rise 5–8% by year end, especially with 2026 models. [15:18]

Used Car Prices: Still Steep

• Average transaction price for a 3-year-old used car: just over $31,000 (Q2 2025), near record highs. [16:50]
• Advice: Always compare prices online (Kelley Blue Book, Edmunds). “Make sure that you’re not overpaying what the market price is right now.” [16:53]
• Spreadsheet tip: Aggregate repair costs, reviews, and pricing to compare options and make informed decisions.

Negotiating: Is There Room?

• Negotiation’s harder at brands like Tesla and online dealerships (Carvana, CarMax). Inventory shortages further limit negotiating power, especially for desirable late-model used cars. [18:42]
• There’s some price movement in new cars—average MSRP is higher than average paid price, indicating some people negotiate successfully. Incentives and low-rate financing are returning for well-qualified buyers. [19:25]
• Time your purchase: End of the month/year or when new models hit lots, for best deals. [20:18]

Down Payments: How Much?

• Recommendation: 20% down on new cars, 10% on used. This lowers both overall interest costs and possibly the interest rate.
  • Shannon: “Anything you can put down is going to be better than nothing—without draining your emergency account.” [20:57]
• Listener Vicki’s 35%+ down payment is “above and beyond and very commendable.” [22:00]

Loan Terms: 48 or 60 Months?

• General: Keep loans to 60 months (new) or 36 months (used) to save on interest.
• Shorter term: Higher monthly, lower total interest.
• Longer term: Lower monthly, higher total interest.
• For Vicki (buying used, plans to pay off in 2 years), 48 mo = ~$420/month, ~$2,400 (if paid in 2 years); 60 mo = ~$350/month, ~$2,600 (if paid in 2 years). [23:18]
  • Difference: Only ~$200 in interest paid, so flexibility and comfort may trump minimal cost difference.

Notable Quote:

“The question comes down to how much Vicki can comfortably afford at the moment… Some people hate paying interest, so they want to minimize it as much as possible. But… they might be fine with that lower monthly payment, even if it means paying around $200 more in interest.”
— Sean Pyles [24:41]

New Tax Rules: Deducting Auto Loan Interest

• Big “Beautiful Bill” allows deduction up to $10,000 in interest, but only:
  • On new vehicles, assembled in US
  • For original owners—not leases, not refinances
  • Phases out at higher incomes; full benefit requires ~$120k+ vehicle (per Cox Automotive) [26:03]

Financing Best Practices

• Get loan pre-approval before shopping to gain negotiating leverage and secure the best rate.
  • Pre-qualification uses a soft credit check and is an estimate; pre-approval is a hard inquiry and more of a commitment. [27:33]
  • Shop for rates within a two-week span to minimize credit score impact.

Paying Off Early; Using Pension Funds

• Prepayment penalties are now rare; early payoff is usually fine. [29:34]
• However, consult a tax professional before tapping pension money due to possible tax or income implications.

Final Thoughts from the Car Nerds

• Use auto loan calculators to compare scenarios and see total loan cost. [30:42]
• Compare prices with online guides, get pre-approvals, and don’t skip research—these steps are more important than ever with high car prices.

Memorable Moment:

“An auto loan calculator is your best friend and NerdWallet has a great one… If you have questions about loan terms like Vicki, the calculator will let you run different scenarios… So using those tools, along with the other things we’ve talked about… these things have always been important, but I personally feel that they're more important now when car prices are so high and there really isn’t any indication they’re going to start falling anytime soon.”
— Shannon Bradbury [30:42]

Timestamps for Important Segments

• AI Stocks & Bubble Discussion: 02:31 – 11:42
• Car Market State (Price & Tariffs): 14:04 – 16:50
• Negotiation & Used Car Pricing: 17:50 – 20:57
• Down Payments: 20:57 – 22:00
• Loan Term Analysis: 22:25 – 25:41
• New Auto Loan Tax Deduction: 26:03 – 27:13
• Financing Best Practices: 27:33 – 29:17
• Paying Off Early/Pension Considerations: 29:17 – 30:19
• Final Car Buying Tips: 30:42 – 31:46

Notable Quotes (with Attribution)

• “Nvidia is now worth more than $4 trillion… bigger than the United Kingdom, actually.”
  — Sam Taub [03:13]
• “According to [MIT’s] report, 95% of companies that are experimenting with AI right now are seeing zero return on that investment.”
  — Sam Taub [05:11]
• “Nvidia alone is about 8% of the S&P 500 index… The top seven companies… make up about a third of the index.”
  — Sam Taub [09:22]
• “Inventory levels seemed to be stabilizing… but prices did not drop significantly. They have been stable all year at about $48,000, $49,000…”
  — Shannon Bradbury [14:04]
• “Anything you can put down is going to be better than nothing—without draining your emergency account.”
  — Shannon Bradbury [20:57]
• “An auto loan calculator is your best friend and NerdWallet has a great one…”
  — Shannon Bradbury [30:42]

Takeaway Tools & Resources

• For Investors:

  • Diversify beyond tech stocks—consider international stock, bond funds.
  • Check out NerdWallet’s robo advisor roundup and “lazy portfolio” guides.

• For Car Buyers:

  • Research prices with Kelley Blue Book, Edmunds.
  • Use loan calculators to see how term and down payment impact total cost.
  • Secure pre-approval before visiting dealerships.
  • Consult a tax advisor if using retirement funds.

This episode is packed with research-driven, candid advice to help listeners make smarter decisions on both investing in AI and navigating today’s challenging car market. For anyone facing these questions, the Nerds’ breakdown offers clear, actionable insights.