Over on Main this morning, they’re talking bubbles again:
[S]ome investors are growing concerned about the speed at which analysts’ estimates are rising. Some fear rising costs for AI companies, a drop in demand for the technology or a difficulty turning spending into profits could see earnings fall short.
You know the routine. We’ve done it often enough over the decades. Supernormal profits won’t be unsustainable, because they never are, but trying to time the turn is a mug’s game. Capex trends that have caused investors to crowd into tech hardware and energy stocks aren’t necessarily structural if there’s no clear path to a return on investment, the surge in net borrowing to pay for data sheds risks draining liquidity, and the interest rate outlook is as murky as a reflecting pool.