Several multibillion-dollar deals, including OpenAI’s investment in Advanced Micro Devices (AMD) on Monday, have led Wall Street analysts to draw parallels to the 2000 Dot-Com Bubble. These deals have led to outsized gains and exuberant investor sentiment as stocks continue to advance without fear.
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“History rhymes a lot, so I would think some version of it is going to happen again,” said hedge fund manager Paul Tudor Jones in an interview with CNBC’s Squawk Box. “If anything, now is so much more potentially explosive than 1999.”
Bubble Concerns Inflate as Tech Dominates S&P 500
OpenAI has led the charge, announcing other massive deals with Nvidia (NVDA) and Oracle (ORCL) over the past few weeks.
“If any one of these deals falls through it has this domino effect downstream that I think is concerning,” said Zacks Investment Management client portfolio manager Brian Mulberry. “It reminds me of what happened with telecom back in the mid-nineties.”
Other experts are concerned about the concentration of the S&P 500 (SPX). Today, the largest tech companies hold a 35% weight in the index compared to 15% in 1999. That means that a small group of stocks is driving much of the index’s performance, raising the risk of sharp swings if these companies fall.
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