Pietari Laurila
United Arab Emirates
1m
Edited
ᴡᴇᴇᴋʟʏ ᴜᴘᴅᴀᴛᴇ 3 ɴᴏᴠᴇᴍʙᴇʀ 2025 “We believe it’s time to call the third bubble of our century: the A.I. bubble,” wrote the New York Times last month. “Large swaths of investors pour ever more into an asset with little regard for how much it could earn and when.” www.nytimes.com/2025/10/14/opinion/ai-bubble-stock-market-tech-stocks.html Talk of a bubble is intensifying after the S&P 500, Wall Street’s benchmark index, notched its sixth consecutive monthly gain in October, the longest winning streak since 2021. For three years now, equities have done little but rise. Andrew Garthwaite, UBS’s chief global equity strategist, argues that the preconditions for a bubble are firmly in place. He highlights seven recurring ingredients that tend to underpin such episodes: www.marketwatch.com/story/six-out-of-seven-conditions-are-met-for-a-stock-market-bubble-this-strategist-says-b448be34 1. A deeply entrenched “buy-the-dip” mentality. 2. A widespread “this time is different” narrative linked to a transformative technology. 3. Roughly 25 years since the last major bubble — enough time for a new generation of investors unscarred by past excesses to dominate markets. 4. Surging retail investor participation. 5. Mounting profit pressure in the broader market. 6. Narrowing market breadth, with gains concentrated in a handful of stocks. 7. Loose monetary conditions encouraging risk-taking. A recent report by Goldman Sachs argues, however, that, despite AI-fuelled exuberance, markets have not yet entered full-blown bubble territory. www.gspublishing.com/content/research/en/reports/2025/10/08/3da3403c-c6ea-4a66-816f-a70e09afee7c.pdf The bank notes striking parallels with past manias, such as lofty valuations, market concentration, surging capex and speculative IPOs, but also sees crucial differences. Today’s tech rally, it argues, is underpinned by genuine earnings growth, strong balance sheets and limited leverage, unlike the debt-fuelled excesses of the late-1990s. Still, valuations look stretched, and concentration risk is acute: the top ten US stocks now account for nearly a quarter of global market value. Should profits at these giants falter, a correction could follow, though systemic contagion appears unlikely. Goldman recommends mitigating overexposure to the AI theme through diversification: favouring non-US equities, value stocks, and companies that apply AI intelligently to improve productivity and develop new products. From my perspective, given how transformative AI is likely to prove, a full-fledged bubble could still inflate before this cycle ends. My portfolio remains deliberately outside the AI theme. The opportunity set in value stocks is attractive enough that there is no need to venture outside my circle of competence. 𝟮𝟬𝟮𝟱 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 YTD +31.3% 𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗰𝗵𝗮𝗻𝗴𝗲𝘀 None 𝗖𝗼𝗻𝘁𝗮𝗰𝘁 www.triangulacapital.com 𝘛𝘩𝘪𝘴 𝘤𝘰𝘯𝘵𝘦𝘯𝘵 𝘪𝘴 𝘧𝘰𝘳 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 𝘰𝘯𝘭𝘺. 𝘐𝘵 𝘪𝘴 𝘯𝘰𝘵 𝘢𝘯 𝘰𝘧𝘧𝘦𝘳 𝘰𝘳 𝘳𝘦𝘤𝘰𝘮𝘮𝘦𝘯𝘥𝘢𝘵𝘪𝘰𝘯 𝘵𝘰 𝘣𝘶𝘺, 𝘩𝘰𝘭𝘥 𝘰𝘳 𝘴𝘦𝘭𝘭 𝘢𝘯𝘺 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵, 𝘯𝘰𝘳 𝘭𝘦𝘨𝘢𝘭, 𝘵𝘢𝘹, 𝘰𝘳 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘢𝘥𝘷𝘪𝘤𝘦. 𝘗𝘢𝘴𝘵 𝘱𝘦𝘳𝘧𝘰𝘳𝘮𝘢𝘯𝘤𝘦 𝘪𝘴 𝘯𝘰𝘵 𝘪𝘯𝘥𝘪𝘤𝘢𝘵𝘪𝘷𝘦 𝘰𝘧 𝘧𝘶𝘵𝘶𝘳𝘦 𝘳𝘦𝘴𝘶𝘭𝘵𝘴.
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