Is there a bubble risk on Wall Street? The question has been hovering for some time in the trading rooms of New York, where technology stocks continue to be bought liberally, especially those linked to artificial intelligence. A small group of seven companies, the so-called “trillion dollar stars” of the American stock market, are strongly influencing the market, which has reached and repeatedly updated historical highs. But experts now see a situation of euphoria and hypercompaction and an excessive concentration of the market on a few players, which assimilates the picture to that experienced in 2000, at the bursting of the dot-com bubble.
JP Morgan’s Jamie Dimon sees ‘significant’ correction
JP Morgan’s number one Jamie Dimon does not hide the possibility of the bursting of a bubble similar to that of the dot-coms in 2000. “Let’s take artificial intelligence, they are investing a lot of money in it. Artificial intelligence is real and overall it will bear fruit. Just like cars and TVs have borne fruit. But most of the people involved have not been successful”, explained Dimon in an interview with BBC.
The financier now sees “a greater chance of a significant decline in stocks” in six months to two years and says he is “much more worried than others” about the likelihood of a “significant correction” in the stock market.
The IMF and Bank of England were also alarmed
IMF director Kristalina Georgieva also warned of the risks of overvaluation of AI-related stocks. “Spurred by optimism about the productivity-enhancing potential of AI, global stock prices are rising,” Georgieva said, warning “if a sharp correction occurs, tighter financial conditions could dampen global growth.”
Even for the Bank of England, the prices of AI-related securities are too high, close to the peak of the dot-com bubble. The British Central Bank, as it released the minutes of its latest monetary policy meeting, warned that the risk of a “sharp market correction” had increased, noting that valuations appear excessive, particularly for technology companies focused on artificial intelligence. “The market share of the top 5 members of the S&P 500, close to 30%,” the BoE highlighted, “is higher than at any time in the last 50 years.”
Goldman doesn’t see a looming risk
According to Goldman Sachs, the excessive valuation of tech stocks and the concentration of the market would demonstrate the existence of a bubble, even if the investment bank does not see an immediate risk.
A handful of companies have repeatedly updated historical records. Furthermore, there is a concentrated market, with just seven stocks – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla – accounting for 55% of the S&P 500’s gains.
Fears over a potential bubble have intensified in recent weeks after AI giants such as Nvidia and OpenAI announced funding deals, raising doubts as to whether the industry’s major players can continue to support the market. Big tech companies like Half, Microsoft And Amazon they have spent hundreds of billions of dollars on data centers and infrastructure to develop and power artificial intelligence, and have earmarked hundreds of billions of dollars for further investments.
