- Torsten Sløk, chief economist at Apollo Global Management, warns that AI stocks are even more valuable than DOT-COM stocks It was 1999. In his research notes, he showed how shares in Nvidia, Microsoft and eight other companies are creating even bigger bubbles than we saw in the dot-com era. And it can cause serious market damage whenever it pops, and whenever it pops.
There is a lot of skepticism about artificial intelligence, but the chief economist at Apollo Global Management warns that the technology is highly exaggerated and that market crashes are at risk than the 1999 Dot-Com bubble burst.
In a recent research note, Torsten Sløk wrote, “The difference between the IT bubble of the 1990s and today's AI bubble is that the top 10 S&P 500 companies today are overrated than in the 1990s.”
Put another way, investors bet so heavily on AI that stock prices in companies like Nvidia, Microsoft, and Apple are separated from their earnings. The chart that includes SLøk compares the revenue (P/E) ratio from the 12-month forward price of S&P's top 10 companies with the remaining index and overall S&P 500. And today's bubble is even bigger than what marked the end of the dot-com era.
S&P has recently hit new records and is now close to a record high, but Sløk claims the performance gains are due to an increase in top 10 stocks. He worries investors buy hype and pay prices, like the promise and pride of these companies (such as trillion dollar savings and world-changing breakthroughs). The 1990s was a lesson that not all promises would come true.
And while many of these top companies are profitable compared to many dot-com darling losses, fundamentals do not justify multiples.
Sløk sounded other warnings about the economy. In June, he believes the US is at a critical inflection point for bulls, where the economy continues to grow, but inflation remains high. He condemned tariffs for the possibility.
Throck isn't alone. Alibaba Group Chairman Joe Tsai has warned that US AI stocks are in the bubble, similar to longtime tech executive Tom Siebel.
