🚨Tech Mirage 2025: A Bubble That Hisses
While investors cling to hopes of another AI-driven rally, the market is flashing red. The Nasdaq 100 is trading at a P/E ratio of nearly 35, well above historical norms — a clear signal of overheating. Under the surface: slowing capex, tightening exports, and weakening fundamentals.
The QQQ ETF has dropped around 5% year-to-date, with a temporary plunge nearing 25%. The recent bounce? Likely a classic bear trap, driven by misplaced optimism around trade peace and AI hype. But deglobalization is accelerating, and Big Tech’s dominance is under pressure.
Valuations are detached from reality.
Apple trades above 32x earnings while showing just 2% revenue growth YoY. Nvidia has entered anomaly territory with a P/S ratio over 21. Markets are still pricing in future profit booms — but current signals show margin erosion, slower growth, and investment cuts.
Concentration risk in QQQ is extreme.
Apple, Microsoft, Nvidia, and Amazon now make up over 30% of the index. Trouble in just one of these names can drag down the whole sector. And all of them are now facing headwinds: capex reductions, margin compression, and weakening topline performance.
The AI narrative is losing momentum.
GenAI was pitched as the next growth frontier, but competitive pressure from lower-cost global models is growing. Microsoft and Amazon are already reassessing their investment scale. The costs are in — but the returns are fading.
Geopolitics add fuel to the fire.
Fresh tariffs are increasing operational costs and slashing sales for U.S. tech giants. Apple faces rising production expenses, Nvidia is restricted from key chip exports, and informal countermeasures from Asia and Europe are only just beginning.
What’s next?
The moment Microsoft or Amazon publicly confirm cuts to AI capex, the next leg down may accelerate. Declining profits combined with rising costs = a violent compression of multiples.
