This Sky-High Metric Says We're Probably in an AI Bubble

Group 1 - The stock market may be experiencing an AI-fueled bubble, with major indices fluctuating between euphoria and anxiety as tech giants invest heavily in AI data centers while accumulating debt through complex strategies like special purpose vehicles (SPVs) [1][2] - OpenAI is entering long-term agreements for substantial AI infrastructure despite lacking the financial resources to cover these commitments, with analysts estimating a need for $207 billion in new financing by 2030 [2] - The Shiller CAPE ratio, a measure of market valuation, is approaching levels seen during the dot-com bubble, currently just under 40 compared to a historical average of around 17, indicating heightened market exuberance [7][8] Group 2 - The Shiller CAPE ratio smooths out earnings fluctuations over a decade, providing a more stable view of market valuation compared to single-year earnings metrics [6] - The current Shiller CAPE ratio is nearing the peak of the dot-com bubble, which raises concerns about potential overvaluation in the market [7]