• The current AI bubble is being compared to the dot-com bubble of 2000, when internet technology drove stock markets to record highs before a sharp collapse.
• When the dot-com bubble burst, the Nasdaq fell nearly 80% between 2000 and 2002, while S&P 500 investors needed about six years to break even.
• A U.S. study from 2000 showed that the retirement rate among workers fell by around 3% as pension assets evaporated.
• Today, around 45% of UK pension fund assets are invested in U.S. equities, a sharp increase from previous levels.
• AI now accounts for a growing share of the U.S. market, with the ten largest companies representing as much as 39% of total market value.
• Since the launch of ChatGPT in 2022, capital inflows into AI have surged, raising concerns about excessive valuations.
• The Bank of England, the IMF, and the OECD have all warned of the risk of a sharp correction in U.S. technology stocks.
• Investor Michael Burry has bet on a decline in AI stocks, similar to his strategy ahead of the 2008 financial crisis.
• Over the past ten years, the S&P 500 has risen more than 230%, far outpacing the FTSE 100, which gained just 59%.
• The “Magnificent Seven,” including Nvidia, Apple, and Alphabet, account for roughly one-third of the S&P 500’s value.
• Nasdaq’s market capitalization is now nearly five times higher than at the peak of the dot-com bubble.
• Nvidia once reached a valuation of USD 5 trillion before falling to USD 4.4 trillion, losing USD 600 billion due to shifts in market sentiment.
• Around four million people in the UK will reach retirement age within the next five years, making them the most vulnerable group if markets collapse.
• Experts recommend diversifying into bonds, gold, or silver to reduce risk.
• Major concerns center on the lifespan of GPUs used for AI, which may be only one to two years rather than the expected five to six years.
• If depreciation is faster than expected, AI company profits could be “inflated.”
• However, some experts argue that AI may not be a bubble, as real profits still exist and companies have strong balance sheets.
• Those nearing retirement are advised to review their portfolios, especially if invested via tech-heavy index funds.
📌 AI accounts for an ever-larger share of the U.S. market, with the ten largest companies making up 39% of total market value. The “Magnificent Seven,” including Nvidia, Apple, and Alphabet, represent about one-third of the S&P 500. The AI bubble is reviving painful memories of the dot-com era, with the greatest risks falling on those nearing retirement. With 45% of UK pension funds tied to U.S. equities and AI firms at record weightings, even a modest correction could wipe out trillions of dollars.
