The AI market surge reflects solid fundamentals, not bubble speculation. Unlike past bubbles driven by poorly capitalized startups, today's tech gains come from established companies with strong earnings growth. While valuations are elevated, they haven't reached historical bubble levels that signal imminent collapse.
The AI bubble mirrors the dotcom mania with extreme valuations at peak bubble levels and dangerous concentration risks. Seven tech giants now control a third of the S&P 500, creating circular investments and capital misallocation. The economic backdrop lacks the favorable conditions that sustained the 1990s boom.
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