The Excerpt Is the AI boom fueling the next stock market bubble?
Oct 28, 2025
Daniel de Visé, a personal finance reporter for USA TODAY, dives into the whirlwind of the stock market. He analyzes how AI-powered tech giants are propelling record highs and whether this mirrors past market bubbles. Daniel explains the CAPE ratio, suggesting current stock valuations might be overstated. He discusses the implications of a potential bubble, contrasting today's market with the dot-com boom. Listeners also hear about the surge in money market funds as a hedge against volatility, plus practical strategies for navigating this uncertain terrain.
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Market Dominated By Seven Tech Giants
- A handful of tech giants (the "Magnificent Seven") now account for nearly 40% of the S&P 500 and are driving record market highs.
- Those seven stocks rose ~700% over the past decade versus ~100–200% for the broader market, concentrating risk and returns.
CAPE Ratio Flags Overvaluation
- The CAPE (cyclically adjusted price-to-earnings) ratio compares price to earnings to flag overvaluation.
- A very high CAPE suggests stocks are pricey and signals the market may be overheated.
Valuations Mirror Past Bubbles
- Today's CAPE sits near 40, a level previously seen in 2000 and 1929, linking current valuations to historic bubbles.
- That historical parallel raises concern that elevated valuations could precede severe market downturns.