According to Bravos Research, AI-related stocks currently account for approximately 40% of the total market capitalization of the US stock market. This concentration is approaching levels seen before the dot-com bubble of 2000 and the market crash of 1929, once again drawing market attention to the valuation of technology stocks.
The agency stated that the US technology index has nearly doubled in the past 12 months. Looking back over the past 26 years, similar increases have only occurred during the dot-com boom of 2000 and the tech stock rally of 2021, indicating that this round of AI trading has entered a highly concentrated phase.
Valuation levels are close to historical tech boom levels.
Bravos Research believes that the current valuation performance of AI concept stocks is similar to that of previous technology booms. High market expectations for new technologies are driving funds to continue flowing into a few large technology companies.
However, the organization also noted that historical technological booms do not necessarily mean that the technologies involved lacked practical value. Whether it's the internet or previous technological innovations, they have all subsequently achieved widespread application over a longer period and have had a lasting impact on economic activity.
The funding environment continues to support technology stocks.
Bravos Research states that technological adoption alone does not determine stock price movements; financial conditions are equally crucial. Historically, some technologies have continued to transform economic structures even after market downturns, but during periods of tightening liquidity, investor interest in high-risk assets typically declines.
The agency believes that the current liquidity environment remains favorable for technology stocks. Since 2023, the Federal Reserve's overall policy stance has been relatively accommodative, and the market has not formed a widespread expectation of further interest rate hikes, which continues to support growth stocks.
Common conditions for bubbles have not disappeared.
According to Bravos Research, several conditions commonly associated with market bubbles still exist, including high investor enthusiasm, ample liquidity, and strong price momentum.
The agency did not deny that risks are accumulating, but believes that AI-related stocks may continue to be sought after by investors until the aforementioned conditions are clearly reversed.
