From BigGo Finance · BigGo Finance · · 1m 50s
AI Bubble Debate Intensifies as Oaktree Marks Signals Limited Risk
Wall Street's AI bubble fears grow as Oaktree's Howard Marks argues widespread questioning makes a full bubble less likely.
In brief
Wall Street's AI bubble fears grow as Oaktree's Howard Marks argues widespread questioning makes a full bubble less likely. Howard Marks says asking about an AI bubble reduces its likelihood, as Nasdaq-100 drops 5.5% and tech stocks trade at lower P/E ratios. Originally reported by BigGo Finance.
AI Bubble Fears Rise
The Nasdaq-100 Index fell 5.5% last week, intensifying fears of an AI bubble.
Howard Marks' Counterintuitive View
Oaktree Capital Co-Chairman Howard Marks argues that the most telling feature of a bubble is investors' total obliviousness to risk.
Market Signals Mixed
Wall Street today everyone is asking whether a bubble exists, a mixed signal that suggests any bubble would be limited in scope.
Tech Stock Valuations Cooling
The five largest tech stocks trade at an average forward P/E of about 23 times, far below 65 times in 2000.
Shiller CAPE Ratio Alarms
The Shiller CAPE ratio of roughly 41 times is closing in on the 1999 record of 44 times.
Market Concentration Concerns
Nvidia, Apple and Microsoft together account for about 21% of the S&P 500.
Credit Market as Key Trigger
Market participants warn that tech giants are taking on debt to build AI infrastructure, weighing on valuations.
Cloud Spending Surge
The four major cloud providers are projected to spend $700 billion to $725 billion in 2026, up 75% from $410 billion in 2025.
Credit Market Stress Spreads
Japan's Nikkei 225 plunged 3,318.34 points (4.90%) on October 15, closing at 64,425.95.
Marks' Final Assessment
Marks says the term 'bubble' is inherently vague, but the key signal, obliviousness, is not present right now.
“irrational exuberance heedless risk-taking and obliviousness”
What Happens Next
When everyone on Wall Street debates whether a bubble exists, that widespread vigilance may itself cushion the market.
In short
Howard Marks says asking about an AI bubble reduces its likelihood, as Nasdaq-100 drops 5.5% and tech stocks trade at lower P/E ratios.
