Nvidia leads the stock market surge driven by artificial intelligence, recovering a valuation of $5 trillion. In the past two years, artificial intelligence (AI) has been at the center of a constant debate in financial markets: are we witnessing sustainable growth or facing a bubble similar to the dot-com era? The memory of the tech crisis 25 years ago divides investors between those who believe in the sector's solidity and those who fear an abrupt outcome. Some analysts suggest that both scenarios could be occurring simultaneously, supported by mixed signals. On one hand, the spectacular stock rise of AI-related companies, such as ChatGPT or Claude, could indicate excessive optimism. On the other hand, the actual growth in profits of these companies partly justifies current valuations. Chris Buchbinder, a manager at Capital Group, believes that the comparison to the dot-com bubble is valid only if nuanced: “We are closer to 1998 than to 2000,” he notes, suggesting that the critical point of disconnection from fundamentals has not yet been reached. Unlike the 1990s, today’s tech giants—Alphabet, Amazon, Microsoft, Meta, Broadcom, and Nvidia—generate enough cash flow to finance massive investments in infrastructure and data centers without resorting to high levels of debt. Buchbinder emphasizes that profit growth supports valuations and that AI integration is driving productivity across multiple sectors. However, he warns that some companies are resorting to financial engineering and securitization to fund their expansion, raising doubts about the sustainability of returns. Yves Bonzon, chief investment officer at Julius Baer, provides a complementary view. In his analysis, he describes the beginning of 2026 as a phase of sector rotation unprecedented since 2000, with a resurgence of capital-intensive sectors and pressure on business models based on intangibles. The software sector, in particular, has seen its price-to-earnings ratio fall from 12 to 8 times, and some mergers and acquisitions are closing around 6 times. Bonzon warns that historically, when these multiples drop below 5-10 times, the market anticipates structural deterioration, although this time the uncertainty stems from AI disruption rather than an adverse economic cycle. The expert underscores that the market will need time to identify winners and losers in the AI era, justifying a high risk premium. Additionally, the increasing participation of retail investors and the predominance of algorithmic trading—often managed by AI—are changing market dynamics, making sharp movements and rotations more frequent. Interest in AI is also reflected in investment flows into ETFs, especially in Europe, where in January 2026, $55.9 billion was raised, the highest monthly figure recorded, according to David Hsu of Vanguard Europe. Most of these funds were directed towards global equities and developed markets, showing a risk appetite channeled through diversified strategies. Meanwhile, a report from Loomis Sayles, a subsidiary of Natixis Investment Managers, indicates that spending on AI and technology is generating opportunities in private credit, although it warns of potential yield compression and more aggressive structures due to competition among lenders, a phenomenon typical of advanced phases of enthusiasm cycles. In summary, the AI boom is supported by growing profits, real investment, and accelerated adoption, but it also coexists with risks of overvaluation and sector disruption. The market, for now, navigates between optimism and caution, awaiting the true winners of this technological revolution. (Source: businessinsider.es)