Benzinga·2025-09-18 12:08Core Viewpoint - GQG Partners warns that the current technology market is experiencing "dotcom-era overvaluation," with high capital spending and weakening fundamentals potentially leading to more severe repercussions than the 1999 crash [1][2]. Current Conditions More Fragile Than Dotcom Bubble - The report titled "Dotcom on Steroids" argues that the AI-driven boom has pushed the tech sector to a precarious inflection point, concealing underlying risks for investors [2]. - The central thesis indicates that current market conditions may be worse than during the dot-com bubble due to a combination of rich valuations, increasing macro risks, and deteriorating company fundamentals [2]. Capital Expenditure Concerns - GQG highlights a significant increase in capital expenditure (CapEx) necessary for competing in the AI arms race, reaching levels comparable to previous market bubbles [4]. - Big tech's CapEx as a percentage of EBITDA is currently between 50%-70%, similar to AT&T's 72% during the 2000 telecom bubble and Exxon's 65% at the peak of the 2014 energy bubble [5]. Valuation Comparisons - The report challenges the notion that today's tech companies are cheaper than their dot-com counterparts, asserting that they are actually more expensive on a growth-adjusted basis [6]. - Data indicates that the share of S&P 500 companies trading at more than 10 times sales has already exceeded the 2000 peak, suggesting widespread overvaluation [7]. Investment Opportunities - GQG concludes that there are "better investment opportunities outside the tech sector" due to the identified risks [7].