Why investors should be 'concerned' about an AI bubble

Market Sentiment - The recent stock market runup is being compared to nostalgic moments, suggesting a need for caution as these times may not last forever [1][2] - There are parallels drawn between the current AI-driven market and the internet bubble, indicating potential for both positive and negative outcomes [3][4] Investment Environment - Unusual market behaviors and statements from industry leaders are raising concerns about the sustainability of current valuations [5][7] - Historical examples from the dot-com era illustrate that even fundamentally strong companies can experience significant declines post-bubble [9][11] Growth Projections - Current growth rates, such as Taiwan Semiconductor's 16.9% year-over-year sales increase, may not be sustainable, leading to potential deceleration in future growth [13][14] - The market's momentum could be questioned if growth rates slow down and major deal announcements decrease [14] Investment Strategy - Caution is advised in adding to positions during what is perceived as a bubble, as buying at high prices often leads to losses [15][17] - Defensive strategies may be necessary, especially with the current yield on 10-year Treasury bonds at 4%, providing a risk-free income alternative [16][17] Year-End Considerations - The significant 43% rally since April suggests that investors might consider moving to the sidelines as the year ends [17][18]