The AI Bubble Now Is Bigger Than The Dot Com Tech Bubble At Its Peak

Last week, DB's head of thematic research, Jim Reid, published the latest must read version of his "Charts that make you go WOW" (available to pro subs) which repeated a chart the Deutsche strategist has used before, namely on e tracking the earnings of the largest ten companies in the S&P 500 around the market peak in 2000 through to today. Obviously, the current period shares some similarities in valuations to 2000. In that chart, Reid showed how four of the top ten remarkably saw lower earnings in FY 2024 than in FY 2000.

Of course, not all stories are the same: some companies have thrived. Microsoft stands out, with earnings increasing tenfold over the period. And to be clear, this isn’t an anti-earnings narrative: S&P 500 earnings overall have outpaced their long-term average over this period. The point is how unevenly those gains have been distributed.