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I have been posting on the likely 'correction' at the end of the current AI bubble.

But for balance, below is a chart from the FT that shows current valuations of key tech/AI stocks do not match two of the most evident prior bubbles - the tech & Japanese bubbles of 2000 & 1989 respectively.

There may be other factors at play, such as the cross-holding of shares & the performance (or lack thereof) of AI, but this chart at least suggests I and others may be premature in our predictions?

#AI

The price-earnings multiples of the largest stocks are less extreme than in previous bubbles Compares Oct 2025 to tech bubble 2000 & Japan bubble 1989, and show other than Tesla, who valuation is up near the top vlautaon during the Japan bubble, all other shares identified as part of an AI bubble have price-earnings rations well below either of those two bubbles.
#AI

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in reply to Emeritus Prof Christopher May

Michael
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Michael
• •
Really good to see an opposing view point. I agree on both sides: American big tech are bringing in such a disgustingly large amount of money through monopolistic and anti consumer behaviour they can just spend money on whatever they want without real consequence. OpenAI and other generative ai companies are absolutely overvalued and have no path to producing products anyone actually want. TSLA... LOL not worth discussion. #boycottUSA #surveillancecapitalism
#surveillancecapitalism #boycottusa
in reply to Emeritus Prof Christopher May

Thirzah
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Thirzah
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forgive my stupidity here, but: both the price and earnings of the banks were based on their property and stock assets, right? and both the price and earnings of the tech bubble was based on "the tech"? but the price of the ai bubble is based on the speculative value of ai while the earnings come from e.g. batteries, iphones and server licensing?
in reply to Thirzah

Emeritus Prof Christopher May
mastodon - Link to source
Emeritus Prof Christopher May
• •

@thirzah

Well there is, and there is not, a difference; all valuations are based on forward projections of earnings, so whether they are based on tangible assets, or potential services on one level doesn't matter, even if tangible assets might be regarded as having some residual value in the manner services do not. In that sense the AI bubble mixes capital earning expectations (from data farms etc.) with service earning expectations around the actual use of AI

@Thirzah
in reply to Emeritus Prof Christopher May

Bruno Nicoletti
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Bruno Nicoletti
• •
The biggest business in AI is OpenAI who is not listed and is in theory a non-profit so doesn’t have a price/earnings ratio. Yet.
in reply to Emeritus Prof Christopher May

Andrew
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Andrew
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nah it’s different this time because the foundation methods and frameworks are there for pretty much everyone so there’s no clear leader. More distributed this time? Feed more safe?
in reply to Emeritus Prof Christopher May

h4890
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h4890
• •
True. It could continue for 1-2 years. I think I said 1-1.5 years in one of our previous posts. Or did I say 2 years? It also seems to me like countries are getting out of sync. In sweden there is now a small start of a recovery. It is the tiniest positive, so it could still turn out to be an illusion.
in reply to h4890

Emeritus Prof Christopher May
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Emeritus Prof Christopher May
• •

@h4890

yes, if the global economy started moving at different speeds (among the developed, richer countries) then that might be further evidence of a growing disconnect between the US & the rest of the global economy.

@h4890
in reply to Emeritus Prof Christopher May

Chuckles
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Chuckles
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has finance engineered its way beyond the P/E ratio, or are they just keeping things off the books as usual? You're probably right because deregulation usually heralds the beginning of a huge scam, not the end.
in reply to Emeritus Prof Christopher May

MarjorieR
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MarjorieR
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wondering why they've included Oracle from 2000, but not Oracle today. It's current p/e is 44. So now higher than all the other big players except Tesla.
And it peaked at around 60 recently. There hass already been a correction going on.

Are they plotting peak 2025 or now?
The same applies to the other tech stocks but not to the same extent.

worldperatio.com/stock/orcl/

Area

Which is the current P/E Ratio of the Oracle? Is it a reasonable value, or is it foretelling the bursting of a bubble?
World PE Ratio
This entry was edited (1 week ago)
in reply to MarjorieR

Emeritus Prof Christopher May
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Emeritus Prof Christopher May
• •

@marjolica

good Q..... the FT has always been quiet friendly to Ellison, so perhaps just wanting to (quietly) shield Oracle?

@MarjorieR
in reply to MarjorieR

MarjorieR
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MarjorieR
• •

Also noting that this source gives the current Microsoft p/e as 34, somewhat different from the F/T chart. Perhaps a bit more digging is required?

worldperatio.com/stock/msft/

Area

Which is the current P/E Ratio of the Microsoft? Is it a reasonable value, or is it foretelling the bursting of a bubble?
World PE Ratio
in reply to Emeritus Prof Christopher May

ImmigrationIsNotACrime
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ImmigrationIsNotACrime
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Does the US economy have much other than AI to drive growth? Its not just that they've bet heavily on AI but also that they don't have much else.
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