ABC News Daily Are AI stocks a bubble ready to burst?
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Nov 6, 2025 Ian Verrender, ABC's Chief Business Correspondent, dives into the soaring valuations of AI-driven tech stocks. He highlights the impressive rise of companies like NVIDIA and their $5 trillion valuation, fueled by expectations of future growth. Verrender contrasts today’s thriving AI landscape with the dot-com bubble, emphasizing sustainable profits. He discusses investor confidence and the massive infrastructure spending driving this boom. As he navigates the concerns of a potential market correction, he questions whether we’re in a bubble or witnessing a significant tech transition.
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A Few Firms Command Market Gains
- The Magnificent Seven (Apple, NVIDIA, Microsoft, Amazon, Tesla, Alphabet, Meta) now drive a huge portion of US market value and growth.
- They collectively account for over a third of the S&P 500 and drive much of recent market performance.
Valuations Backed By Profits, Not Hype
- Current high valuations rest on investors' expectations of future earnings growth rather than speculative zero-revenue dot-com models.
- These tech firms are profitable and funding AI investments from cash flow, not by burning investor capital or piling debt.
AI Drives A Real Investment Boom
- The AI boom involves massive real investment in data centres, hardware and software across the economy.
- About five of the Magnificent Seven account for nearly 30% of S&P 500 capital spending right now.