"The Shiller cyclically adjusted price-to-earnings ratio for the S&P 500 stands at approximately 38 to 40, depending on the day you check. In 155 years of recorded data, the CAPE has been higher exactly once: March 2000, when it reached 44.19."
"The ten largest companies in the S&P 500 now account for 36% to 40% of the index's total market capitalisation, nearly 50% above the dot-com peak concentration of roughly 27%."
"Deutsche Bank's latest fund manager survey found that 57% of institutional investors now identify an AI valuation crash as the single greatest risk to markets."
"The structural parallels between the current AI equity rally and the dot-com bubble are not superficial. They are mechanical. Market concentration has exceeded dot-com levels by a wide margin."
The Shiller CAPE ratio for the S&P 500 is currently between 38 and 40, the second-highest in 155 years, only surpassed by the dot-com peak. The top ten companies in the S&P 500 represent 36% to 40% of its market capitalization, significantly higher than the dot-com era. While AI companies are profitable, concerns about a potential valuation crash persist, with 57% of institutional investors identifying it as a major risk. The outcome hinges on whether substantial investments in hyperscaler capex yield justifiable returns.
Read at TNW | Artificial-Intelligence
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