Echoes of dotcom bubble haunt AI-driven US stock market
5 months, 3 weeks ago

Echoes of dotcom bubble haunt AI-driven US stock market

The Hindu  

A U.S. stock rally supercharged by excitement over artificial intelligence is drawing comparisons with the dotcom bubble two decades ago, raising the question of whether prices have again been inflated by optimism over a revolutionary technology. A small group of massive tech stocks including AI chipmaker Nvidia symbolize today's market, recalling the "Four Horsemen" of the late 1990s: Cisco, Dell, Microsoft and Intel. Echoing the dot-com boom, the information technology sector has swelled to 32% of the S&P 500's total market value, the largest percentage since 2000 when it rose to nearly 35%, according to LSEG Datastream. While both stocks have soared, Nvidia trades at 40 times forward earnings estimates, compared to Cisco's 131 level reached in March 2000, according to Datastream. "Our base case is that this tech bubble won't burst until the valuation of the overall market has reached the sort of level that it did in 2000," Capital Economics analysts said in a note.

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