Overview

• Major indices sit at records with gains concentrated in a few tech giants, while the S&P 500 trades near 22 times expected earnings versus a long-run average around 16.
• Corporate outlays for AI remain enormous, including Nvidia’s $100 billion tie-up with OpenAI to build data centers, Microsoft’s roughly $90 billion plans, and multiyear spending at Amazon and Meta in the tens of billions.
• Officials and industry leaders flag elevated valuations and rising correction risk, with the Bank of England, the Federal Reserve and OpenAI’s Sam Altman cautioning that investor enthusiasm may be overextended.
• New research this week from Morgan Stanley and Goldman Sachs argues current AI leaders look unlike the dot‑com era, citing higher free‑cash‑flow yields, stronger margins and healthier balance sheets, plus valuation measures that appear less extreme.
• Analysts note timing and severity of any pullback remain uncertain, and some see Europe as less stretched than the U.S., suggesting any correction there could be milder.