AI Bubble Is More Unhinged Than Dot-Com—A Chilling Warning From The Inside
Today's AI-fueled market frenzy is even more dangerously inflated than the 1990s internet bubble that ended with a historic crash in 2000.
That’s according to Apollo's chief economist Torsten Slok. This time, it's not just hype—it’s concentrated, institutional, and sitting atop the S&P 500's biggest names, he adds.
Related: The Last Time This Warning Flashed, S&P 500 Crashed The Most Since 2008
Top-Heavy Trouble
Back in 2000, the top 10 companies in the S&P 500 had a price-to-earnings (P/E) ratio of 25—lofty, but still loosely tethered to fundamentals. Today? That same top 10 group, now dominated by AI darlings like Nvidia Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT), and Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), carries a P/E of 25 once again… but with far more weight.
What's different now, Slok warns, is that the rest of the market isn't anywhere near as stretched. The top-heavy S&P is showing signs of structural imbalance—making the AI bubble both narrower and potentially more dangerous.
Year
Top 10 (P/E)
Excluding Top 10 (P/E)
S&P 500 (P/E)
1990
15
10
10
1995
20
15
15
2000
25
15
15
2005
15
15
15
2010
10
15
15
2015
20
15
15
2020
30
20
20
2025
25
20
20
While the overall S&P 500 P/E ratio sits at a seemingly reasonable 20, the ex-top-10 group has a P/E of just 20, indicating that the bulk of the valuation risk sits squarely on the backs of a few AI titans. If sentiment cracks, the fallout won't be gradual—it'll be violent.
How To Hedge Or Harvest The AI Mania
For investors seeking to navigate the storm, ETFs provide a practical way to express their views. If you believe the bubble still has room to inflate, the Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) gives exposure to a broad range of AI-focused companies.
But if you’re feeling the chill from Slok's warning, consider defensive hedges like the Invesco S&P 500 Equal Weight ETF (NYSE:RSP), which dilutes mega-cap exposure, or ProShares Short QQQ (NYSE:PSQ) to bet against the froth.
With valuations this stretched and history offering a sobering mirror, the AI trade might not end in a bang—but it could still blow up.
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