Investing Ideas

Analyzing whether artificial intelligence could be an investment bubble

We’re far from dot-com levels, but elevated valuations and thematic volatility require diversification and investing with vigilance.

By: Anu Gaggar Bryan Sajjadi
Updated: 1/28/2026
Key Takeaways
  • We believe artificial intelligence (AI) remains a multiyear investment theme that will drive increases in productivity, efficiency, and profits, although the degree to which the technology will drive a structural break from historical economic trends remains difficult to quantify.
  • AI has helped drive multiples for both the S&P 500 and technology stocks within this index above the historical mean, even though each remains below the extremes of the late 1990s dot-com bubble.
  • To date, companies have funded their AI-related capital expenditures almost entirely from earnings rather than debt, a sign that it is likely not extreme or increasing the risk of systemic financial strain.
  • Looking ahead, five factors: earnings growth, earnings quality, valuations, capex sustainability, and the interest-rate cycle, may provide useful directional insights into AI-driven economic and market trends.
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