Technology Inflection and Market Growth

The recent surge in the stock market is largely attributed to a significant shift in the technology landscape, particularly due to advancements in generative AI. This shift is recognized as a major inflection point, similar to the rise of the internet in the late 1990s, which led investors to anticipate extraordinary earnings growth over the next five years. Current market expectations are forecasting a remarkable 20% annual earnings growth, which is nearly triple the historical norm of 7% to 8%. This optimistic outlook raises skepticism about whether the anticipated growth can actually be delivered, as previous instances reveal the market often anticipates outcomes that may not materialize.