"Top 10 Market Cap Stocks Have Higher PER
Than the Peak of the IT Bubble"
Wall Street has issued a warning that the artificial intelligence (AI) stock bubble in the US stock market is more severe than the past information technology (IT) bubble.
Torsten Slok, chief economist at asset management firm Apollo Global Management, stated in a report on the 16th (local time), "If we compare the differences between the IT bubble of the 1990s and the current AI bubble, it is that the current top 10 companies by market capitalization on the New York Stock Exchange are more highly valued than the top 10 companies of the 1990s."
According to Slok, the 12-month forward price-to-earnings ratio (PER) of the top 10 companies on the New York Stock Exchange is approaching 30 times, surpassing the peak of the 2000 IT bubble, which was around 25 times.
Slok's observations come as the US stock market has surpassed previous record highs despite lingering uncertainties such as tariffs, and as the tech-heavy Nasdaq Composite Index continues to set new all-time highs. Over the past two years, the bull market in New York has been driven by the "AI boom," with big tech companies such as Nvidia, Microsoft (MS), and Meta leading the way. In particular, Nvidia, the dominant force in AI semiconductors, became the first company in the world to surpass a market capitalization of $4 trillion (approximately 5,550 trillion won).
On Wall Street, concerns about an AI bubble have been repeatedly raised since the launch of ChatGPT in 2022. Some agree that big tech stocks remain expensive by historical standards, but others argue that the likelihood of a collapse similar to the 2000 IT bubble is low. John Higgins, chief economist at Capital Economics, said, "Today, the stock prices of AI companies are being driven more by increases in corporate earnings than by valuation expansion," adding, "The US stock market will continue its bull run, led by big tech, through the end of 2026." He also noted, "While the S&P 500 index may struggle to rise further this year, it is highly likely to regain upward momentum."
Global investment bank UBS also analyzed, "If the US Federal Reserve resumes interest rate cuts, all the conditions necessary for a bubble to form will be met," and raised the probability of a 'bubble scenario' materializing by the end of 2026 to 25%. UBS added that even this probability may be underestimated.
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