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But there is a catch. The S&P 500 has rarely been so concentrated, with a handful of stocks accounting for a disproportionate share of market returns.<\/p>\n\n\n\n
What could go wrong? AI investments fail to generate the expected profits, higher interest rates put pressure on valuations and financing costs, or weakening consumer confidence starts hurting corporate margins.<\/p>\n\n\n\n
The real risk may therefore not be excessive valuations alone, but excessive confidence in future earnings, particularly those of a few technology giants.<\/p>\n\n\n\n
For a value investor, the distinction matters. The market is pricing in continued earnings growth. But how much of that growth is sustainable?<\/p>\n\n\n\n