• More than three years after the launch of ChatGPT, OpenAI has reached annualised revenue of USD 20 billion and a valuation of USD 500 billion, while the US stock market is trading at record highs and historically elevated price-to-earnings ratios.
• In addition, the leading technology companies (hyperscalers) have significantly increased their investment activities.
• On the other hand, a recent survey by the MIT Media Lab showed that corporate AI-projects typically fail to deliver any measurable return on investment, leading market participants to question the relevance of infrastructure development.
• Diving into the valuation of various subsets of the equity market, we challenge the widely held narrative of a ‘bubble’ and demonstrate why a much more nuanced perspective is needed.

Three years after the release of ChatGPT, the S\&P 500 has returned a whopping 80\%, and investors have sounded the alarm over historically elevated valuation ratios. A widely quoted J.P. Morgan calculation, which holds that AI-related capital expenditures became the most important contributor to US economic growth in H1 2025, has prompted warnings of an irrational bubble à la 2000. We are taking a closer look at valuation levels and earnings, and their trajectories across various subsets of the equity markets, to arrive at a much more nuanced conclusion.