"One of the most talked-about topics of late is the fear of an AI bubble. Trillions of dollars have been committed to its development, and its rapid ascent has stoked fears by a number of savvy market watchers and insiders that the AI industry is wildly overvalued, similar to the dotcom bubble that burst a quarter century ago. The huge 16% bull run of the S&P 500 year-to-date is over 50% fueled by the Magnificent 7 tech stocks, which are all tied to AI development."
"On this past Thursday, November 20th, the S&P 500 erased -$1.5 trillion in market cap between 10:40 AM ET and 12:20 PM ET. That equates to -$15 billion PER MINUTE for 100 minutes straight. Although the market recovered partially, it's interesting to note that there was no news when this occurred. Therefore, this may have been signs that there are cracks in the dam and more leaks will follow."
Fears of an AI bubble have emerged as trillions of dollars flow into AI development and rapid valuation increases invite dotcom-era comparisons. The S&P 500's 16% year-to-date rally is more than 50% fueled by seven large tech companies tied to AI, while the index excluding those names shows roughly a 7% gain. On November 20 the S&P 500 erased $1.5 trillion in market cap between 10:40 AM and 12:20 PM ET, about $15 billion per minute for 100 minutes, with no accompanying news. Investors seeking non-AI growth or diversification can consider funds such as IFPUX and VPU; IFPUX has delivered strong YTD returns with Oracle as its sole technology holding.
Read at 24/7 Wall St.
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