High Stakes in the AI Trade

With EPS growth expectations double the historical norm, the whole market is priced for perfection that may not arrive.

Key Takeaways

• Equity Multiples Are Above Even Typical Bubble Peaks: The CAPE multiple has expanded by almost +5 points since May to 39.5x, which exceeds every prior bubble peak in the past century outside of the unprecedented tech mania in the late 1990s and early 2000s. The average bubble peak in this valuation metric is 26x. Both the IMF and the Bank of England just issued warnings that the AI bubble risks an “abrupt” market correction.