Camille Van Vyve
12 Nov 2025
Is AI fueling a stock market bubble?
Since Trump’s Liberation Day, global markets have bounced back sharply, reaching new highs driven by the stellar performance of major US tech companies and widespread enthusiasm for AI. This situation has raised concerns of a new tech bubble, drawing comparisons to the dot-com era of the early 2000s. But a closer, more nuanced look tells a different story.
Today’s market is not like the year 2000
Back then, a wave of startups secured funding solely on the promise of digitizing a market segment—often without any results to show. “The companies driving the markets today—the so-called ‘Magnificent Seven’—are not posting phantom profits,” says Roland Gillet, Professor of Financial Economics at Université Paris 1 Panthéon-Sorbonne and ULB (Solvay), and advisor to various public and private institutions. “On the contrary, they’re consistently reporting exceptional financial results, quarter after quarter.” Moreover, some of these firms are buying back shares or paying dividends—clear signs of financial health, and behaviors that were largely absent during the dot-com bubble.
Stock prices are high, but they're not irrational
Goldman Sachs points out that public valuations and trading activity in the 2000s were actually higher than they are today. Sure, the Magnificent Seven are trading at lofty levels—but are those valuations excessive? “There’s strong recurring cash flow backing these companies’ stock prices. And they’re flush with cash,” Gillet adds. “That makes them all the more resilient in the eyes of the market. To simplify: it’s like buying a Mercedes instead of a Dacia. Both get you from point A to B, but one comes with superior qualities—so it’s naturally more expensive.” When a company consistently outpaces its peers in growth potential, it tends to trade at a premium. That doesn’t mean it’ll last forever. Take Nestlé, for example: during the early Nespresso years, its price-to-earnings ratio was well above sector norms—and rightly so. That’s no longer the case today.
P/E ratios have been high for years
More importantly, these high valuations aren’t new. “Most of the Magnificent Seven have had P/E ratios above 30 for years,” says Corentin Scavée, co-founder and Head of Wealth Management at Easyvest. “That’s certainly high compared to the rest of the market. But for companies like Meta, Alphabet and Nvidia, this has been true for over a decade. Amazon’s ratio has even decreased in recent years. So it’s surprising to suddenly hear talk of a new bubble ready to burst.”
Lower interest rates are supporting growth
Falling interest rates are also playing a role in this upward spiral. “They allow tech companies to finance growth at even more attractive rates,” notes Gillet, “which only strengthens their capacity to invest and expand.”
The major AI players aren’t publicly listed
“As for AI itself—not the infrastructure like data centers or chips, but the AI services—the biggest players like OpenAI are private companies,” Scavée emphasizes. “They’re not publicly traded. So if they were to collapse, it wouldn’t directly impact stock markets, even if there would certainly be indirect ripple effects.” And the companies funding them, like Microsoft, are certainly investing billions—but these amounts remain marginal compared to their annual profits.
A circular system, but not a dangerous one
Some worry about the circular investment flows between infrastructure providers, AI developers, and AI users. But this interdependence doesn’t automatically imply systemic risk. Take data centers, which are seeing massive investment today to meet future AI computing needs. If a bubble were to form and pop, resulting in overcapacity, that could actually lower costs for AI users, boosting their margins and development potential.
The Magnificent Seven are not startups
As in any disruptive industry, AI will create winners and losers. Betting on companies with no cash flow or profits is always risky. But investing in established players with strong financials and overflowing order books is a much more reasonable strategy. For the past 10 years, Easyvest clients have applied this approach through a globally diversified equity portfolio. They gain exposure to AI via high-growth, well-capitalized public companies—while remaining invested across all sectors. It’s a risk, but far from an irrational one.
Beware of optimism bias
That said, markets tend to react more strongly to good news—like solid quarterly results—than to bad. And black swan events are always possible: sovereign defaults, bank failures, wars that disrupt global trade... “As we saw during Trump’s election and again after Liberation Day, market sentiment can shift rapidly,” Gillet warns. A reminder worth repeating: volatility is part of the market. Crises are inevitable. But history shows that they are always followed—sooner or later—by new all-time highs.
Index investing remains the most rational long-term strategy
The index investing (in ETFs) strategy championed by Easyvest is naturally diversified, giving investors simple exposure to the global market. True, this approach allocates more weight to large US tech firms—currently the main AI drivers. But these companies have solid fundamentals, and their valuations are backed by real, measurable performance—traits not typically found in financial bubbles. While the world is never immune to shocks and downturns, global market exposure—across all geographies and sectors—remains a rational, resilient long-term strategy.
Fun fact: this article wasn’t written by AI
We couldn’t finish without clarifying: this article was not written with AI. Not because we’re anti-AI—far from it. At Easyvest, we use AI every day, whether for content creation or software development. But sometimes the AI-generated output just doesn’t cut it. And starting from a blank page is the better path. This article was one of those times.