The case against the bubble

Excitement about AI companies isn't stopping. If investment in these technologies in 2025 exceeded US$1.7 trillion, by 2027 it could exceed US$3.3 trillion according to specialized reports. One of investors' big concerns is that we are facing a bubble, similar to what happened in 2000 with the “dot-com” crisis.

While the above cannot be totally ruled out, there are some data that go against this thesis. First, the companies that have driven the market in recent years are also the ones with the most earnings. The Magnificent 7 have had earnings growth over the last 3 years of 31%, 40% and 22% (E) vs. -4%, 4% and 10% (E) for the S&P 500 index without them. On the other hand, while in 2023 the leading tech companies all showed returns of 20% to 215% above the market, in 2025 only Google and Meta beat the benchmark index; that is, the market would be differentiating more precisely which companies still justify a premium in their valuation. In addition, in 2025, of the 17.9% return the market obtained in the U.S. 14.3% is explained by earnings growth, 1.5% by dividends and only 2.1% by an increase in multiples.

The market is at valuation levels above its long-term average, which is normally associated with returns below equilibrium. That said, a successful investment strategy shouldn't focus on anticipating the next bubble, but on allocating assets in a disciplined way according to each investor's long-term objectives.

Column written by José Ignacio Villarroel for Diario La Segunda