AI boom: Is the economy running on only one cylinder?
The year 2025 put the global economy to the test. Political tensions, new alliances and an environment of increasing uncertainty characterised the global situation. Although the economy showed stability overall, it was hardly noticeable in everyday life. It seems as if the economy is running on only one cylinder: everything appears to depend on the AI boom.
Christof Reichmuth
- 2025 marked by economic uncertainty and geopolitical tensions
- AI boom mobilises enormous capital flows
- Risks remain due to high valuations and concentration
Investors must adapt to a new reality shaped by technological innovations, above all artificial intelligence, which has increasingly established itself as a key driver of growth and investment.
The AI boom: déjà vu?
The AI sector mobilised enormous capital flows in 2025. In the United States in particular, massive investments are driving the market into overdrive. But this is precisely where the question arises: is this a structural change with long-term earnings potential, or is it an exaggeration, as the markets have experienced time and again?
A look back at history urges caution. The dot-com era and the Chinese property boom show how quickly grand visions can turn into exaggerated valuations. When expectations outpace reality, a painful correction often follows. There are currently increasing signs, such as the reciprocal transactions between OpenAI and AMD, that the market for AI and technology stocks is showing signs of a bubble forming. Whether to actively exploit this development or to wait and see remains a personal decision. The opportunities are undeniable, but the risks are just as real.
A delicate mix: high valuations and high concentration
Investors should keep a close eye on the strong concentration in US indices. Technology stocks dominate these markets, but at the same time they often have high valuations. If actual profits fall short of high expectations or if long-term interest rates continue to rise, the stock market could be in for a rude awakening.
A look at history illustrates the risk: after the dot-com bubble burst, the Nasdaq lost more than 75 per cent of its value in the following two years, while the S&P 500 lost more than 35 per cent. The equally weighted S&P 500 Index, on the other hand, performed much more stably over the same period. Although we are probably not yet at the peak of the AI cycle and the potential fall is less severe, we nevertheless advise more cautious investors to diversify more broadly now in order to avoid the risk associated with capitalisation-weighted indices.
