Weekly Buzz: Why the AI rally has more substance than the dot-com boom

There’s a difference between the AI-driven tech rally and the dot-com boom. Unlike the early 2000’s, the biggest names today are backed with real earnings and mountains of cash.

Why this time feels different

The major players in tech – Microsoft, Apple, Nvidia, Alphabet – sit at the core of the modern economy: cloud computing, chipmaking, and digital platforms. They’re generating huge piles of cash and have generally used it to reinvest and scale their businesses. What’s more, their growth is self-funded and supported by profits, rather than debt.

As Goldman points out, tech-sector earnings per share have accelerated since the 2008 Global Financial Crisis. That’s a critical distinction: in a market bubble, promises come first, and in many cases, the earnings don’t arrive. This time around, profits are already here, and investors are taking that as a sign that the rally has substance.

It’s one thing for companies to deliver on growth, and another for investors to pay for it. It’s true that tech stocks are expensive, but they’re not wildly out of line with history. Goldman’s analysis shows that the Magnificent Seven are trading at around 27x forward earnings. That’s high, but it’s nowhere near dot-com territory, where stock prices were at 50x earnings.

What this means for you as an investor

Today’s AI-driven surge is building tangible assets – data centers, power networks, logistics systems – that could lift productivity across entire industries. The opportunity set is broadening: stock markets in Europe and Asia have kept pace with the US this year, and rising demand for electricity, equipment, and construction means the beneficiaries aren’t just software firms.

Still, market expectations are high, and any miss on earnings from the top players could trigger a pullback. There’s also concentration risk: the ten biggest US stocks now make up almost a quarter of the global stock market. Diversification remains your best defense: investing across regions and sectors means you capture the AI boom's upside and mitigate the downside.

(For a portfolio that’s already built with a diversified mix of assets, check out General Investing.)

In Other News: China’s economy is chugging along

China's economy grew 4.8% last quarter compared to a year earlier, its slowest pace in 12 months. That number keeps the country on track for its annual 5% target, but there’s more going on underneath.

Chinese factories were whirring away in September: production jumped 6.5% year-over-year. The rest of the country, however, wasn’t feeling quite as industrial. CNBC reports that consumer spending fell to its lowest point in nearly a year: retail sales grew 3% in September, down from 3.4% in August.

Beijing officials will meet this week to map out policy goals for the next five years. They could stick with the old playbook: support manufacturers, make things, ship them overseas, lean on exports. Or, they could try something a little more difficult: get China’s consumers to spend.

Household spending makes up a far smaller slice of China's economy than in the US, Europe, or Japan. According to McKinsey, net new household deposits hit 17.94 trillion yuan in the first half of 2025, up sharply from 11.46 trillion yuan a year earlier. In other words, people are sitting on cash, not spending it.

Fix that, and China becomes less vulnerable to external factors, like tariffs. Changing decades of saving behavior, however, takes more than a stimulus package. It takes long-term reforms to healthcare, pensions, and other social safety nets, to make folks feel secure enough to open their wallets.

(If you’re looking for exposure to China’s long-term growth story, try Flexible Portfolios.)