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The recent sell-off in AI stocks has reignited the question of whether we’re seeing a repeat of the dotcom bubble. Janet Mui, head of market analysis, discusses the similarities and some important differences.
Key Highlights
AI faces a big test:
Strong tech earnings growth continues to underpin the positive view on AI-related investments, but the extraordinary capital spending and financing requirements leave little room for disappointment.
Credit markets are flashing caution:
Widening corporate bond spreads and growing scrutiny of AI -related borrowing hurt market sentiment.
Central banks remain vigilant:
The Federal Reserve, European Central Bank and Bank of Japan all held interest rates in October, but inflation pressures mean further rate rises remain possible.
