The astonishing run up in stocks since “Liberation Day” in April (the day the Trump Administration announced massive worldwide tariffs) continued unabated in the third quarter, as markets continue to be enamored with the advancements in Artificial Intelligence (AI) and the growth of the ecosystem surrounding it. As the Administration takes a softer approach toward China, worries about devastating tariffs imperiling the U.S. Technology sector have been pushed aside, while the advancements in video and text generation, as well as improving technical capabilities of AI models have swallowed the market’s attention compared to the rest of the universe of stocks.

Due to the enormity of the committed capital investments ($3 Trillion) by Technology companies over the next three years, what comes to everyone’s mind is “are we in a bubble?”. With market valuations approaching the highs of the last Technology cycle in the 1990s, the inclination is neither unwarranted nor unexpected. This rings especially true when equity markets appear to be unfazed by any negative developments in trade, global conflicts or a slowdown in the housing market. The bifurcation in forward progress between stocks and the real economy is as wide as it has ever been.