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URLhttps://financialpost.com/financial-times/how-big-stock-market-america-bubble
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Meta TitleHow big is the stock market's America bubble? | Financial Post
Meta DescriptionThe U.S. has grown to nearly two-thirds of global equity market value, but some analysts see danger in the 'huge bet on AI.' Find out more.
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Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials Home Financial Times Investor How big is the stock market's America bubble? The U.S. has grown to nearly two-thirds of global equity market value, but some analysts see danger in the 'huge bet on AI' Author of the article: You can save this article by registering for free here . Or sign-in if you have an account. Today's tech dominance on Wall Street has left many investors nervous that even a portfolio tracking a broad spread of global shares leaves them with too many eggs in one basket. Photo by JOHANNES EISELE/AFP/Getty Images files United States stocks’ huge surge since the global financial crisis means they account for almost two-thirds of the world’s investable market , raising concerns about whether such dominance creates too much risk for investors’ portfolios. Subscribe now to read the latest news in your city and across Canada. Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others. Daily content from Financial Times, the world's leading global business publication. Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on. Daily puzzles, including the New York Times Crossword. Subscribe now to read the latest news in your city and across Canada. Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others. Daily content from Financial Times, the world's leading global business publication. Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on. Daily puzzles, including the New York Times Crossword. Create an account or sign in to continue with your reading experience. Access articles from across Canada with one account. Share your thoughts and join the conversation in the comments. Enjoy additional articles per month. Get email updates from your favourite authors. Create an account or sign in to continue with your reading experience. Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Sign In or Create an Account or Wall Street has raced ahead of international rivals over the past decade and a half, driven largely by a rally in the tech sector, and particularly companies linked to artificial intelligence , which is now worth almost as much as all the stocks in Europe combined. But a recent pullback in tech shares has underlined the growing nervousness around soaring valuations in a market that has swallowed an ever larger share of global investors’ allocations. Canada's best source for investing news, analysis and insight. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Investor will soon be in your inbox. We encountered an issue signing you up. Please try again “If you hold a global tracker then by definition two-thirds of that is the U.S., and a lot of that is in Silicon Valley specifically,” said Paul Marsh, a professor of finance at London Business School who has spent the past 25 years tracking long-run investment returns. “That means you’re very vulnerable to this huge bet on AI.” Consistent returns have helped the U.S. stock market balloon in size since 2010, with the country’s share of global free-float market capitalization climbing from about 40 per cent in the aftermath of the global financial crisis to more than 64 per cent by 2025. The U.S. has held the title of the world’s largest stock market for much of the past century, having edged ahead of the United Kingdom — the dominant market during the 19th century — by the early 1900s. By its peak in the late 1960s, the U.S. made up more than 70 per cent of the global investable market, according to the UBS Global Investment Returns Yearbook. This high point was driven by America’s booming postwar economy, but also a relative lack of competition: Most of today’s “emerging markets” were yet to develop significant stock markets. But the global crash of 1973-74 hit the U.S. particularly hard. Wall Street stocks did not climb back to their late 1960s peak for more than 20 years, according to Brunel University professor of banking and finance E Philip Davis. This decline allowed a new global leader to emerge, albeit briefly: Japan became the only country in the past century to surpass the U.S. as the world’s largest stock market. The shift arose at the height of the late 1980s Japanese asset price bubble, which later burst. The end of this speculative mania left foreign and domestic investors deeply skeptical about Japan’s equity markets, and its economy lay stagnant for decades. It was not until last year that the benchmark Nikkei 225 broke beyond its bubble-era peak. “Every now and then, finance goes off the rails and that happened in Japan. People get overenthusiastic, everybody feels rich, but then it turns out to be a house of cards,” said Richard Sylla, professor emeritus of economics at NYU Stern School of Business. Parallels between today’s stock market and these historical crashes are making some investors uneasy. “The No. 1 question I get asked at the moment is around what to do about the U.S. stock market,” said Duncan Lamont, head of strategic research at U.K. fund manager Schroder Investment Management. However, the “striking persistence” of the U.S. equity market’s performance since 2008 makes it difficult to push against the trend, because “naysayers have been wrong many times over,” he said. The S&P 500 index has delivered average annual returns of about 14 per cent since 2010, outstripping all other major national benchmarks. That performance was bolstered by gains of more than 20 per cent in both 2023 and 2024, as excitement about AI pushed U.S.-listed megacap technology stocks, such as chipmaker Nvidia Corp., to record highs. The start of 2025 has brought a rare bout of Wall Street underperformance, as relatively unloved European markets play catch-up. U.S. dominance is also a consequence of foreign companies, particularly in the tech sector, choosing to list in New York in search of higher valuations. Some investors argue this trend has brought many of the world’s best companies to the U.S. and will make the market more resilient to an economic downturn. “I can pretty much build a global portfolio just relying on U.S. markets,” said Jack Ablin, chief investment officer at private investment firm Cresset Capital. But, for others, it is not just the outsize role of the U.S. market but also its concentration in a small number of stocks that is fraying nerves. In particular, skeptics point to the huge gains of many Silicon Valley giants, which Torsten Slok, chief economist at private capital group Apollo Global Management Inc., said had become “ridiculously overvalued.” The Magnificent Seven group of giant technology stocks — Apple Inc., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corp., Nvidia and Tesla Inc. — hold almost a third of the S&P 500’s US$51.8 trillion market value, while the index’s cyclically adjusted price-to-earnings ratio, a measure of valuation, is approaching its highest level since the early 2000s. “Periods come and go where bubbles start to form. And we are in a bubble today in the U.S., and a bubble in the tech world,” said Slok. Bullish investors argue that Big Tech’s strong earnings growth and AI’s potential to spur productivity justify the lofty valuations of many of the world’s largest companies. Bearish commentators, meanwhile, draw comparisons between today’s market and the dotcom bubble that burst at the beginning of the millennium. Investor confidence was shaken in January when China’s DeepSeek unveiled AI advances apparently achieved using far less computing power than U.S. tech groups, casting doubt on the need for the vast capital expenditures made by Magnificent Seven companies. This month, renewed jitters have hit the tech sector, pulling the U.S. market back slightly from all-time highs. This is not the first time that one sector has overwhelmed Wall Street. In the 1800s, railroad companies’ hunger for investment played a central role in the early development of the U.S. stock market. By 1900, they represented more than 60 per cent of market value. “Artificial intelligence is the wave of the future right now, but a hundred years ago the wave of the future was rail companies. Then we had a wave of everybody buying electricity companies,” said Stern’s Sylla. The relative decline of a dominant industry is not necessarily bad news for investors. An investor who held railroad shares since 1900 would have outperformed the broader U.S. market, according to research by Marsh in 2015. That is despite the fact that railroads’ overall share of the market declined as companies from a plethora of other industries joined. Even so, today’s tech dominance — and U.S. dominance — has left many investors nervous that even a portfolio tracking a broad spread of global shares leaves them with too many eggs in one basket. “The bottom line is that if I open Page One in my finance textbook, it says that I should diversify,” said Slok. “People are looking at their holdings . . . and asking a very, very fundamental question, namely: ‘Am I diversified?’ And the answer today to that question is a very, very clear no.” © 2025 The Financial Times Ltd Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here . By continuing to use our site, you agree to our Terms of Use and Privacy Policy .
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The U.S. has grown to nearly two-thirds of global equity market value, but some analysts see danger in the 'huge bet on AI' Author of the article: ![Financial Times](https://secure.gravatar.com/avatar/f90f4d3897ea8b2a0fa40a23bed95d16?s=70&d=mp) Financial Times Stephanie Stacey and Mari Novik in London Published Mar 04, 2025 5 minute read [Join the conversation](https://financialpost.com/financial-times/how-big-stock-market-america-bubble#comments-area) You can save this article by registering for free [here](https://financialpost.com/register/). Or [sign-in](https://financialpost.com/sign-in/) if you have an account. ![Today's tech dominance on Wall Street has left many investors nervous that even a portfolio tracking a broad spread of global shares leaves them with too many eggs in one basket.](https://smartcdn.gprod.postmedia.digital/financialpost/wp-content/uploads/2025/03/0305-mg-stock-bubble.jpg?quality=90&strip=all&w=288&h=216&sig=K3v46XKJojqqf0JV0QoShA) Today's tech dominance on Wall Street has left many investors nervous that even a portfolio tracking a broad spread of global shares leaves them with too many eggs in one basket. Photo by JOHANNES EISELE/AFP/Getty Images files Article content United States stocks’ huge surge since the global financial crisis means they account for almost two-thirds of the [world’s investable market](https://financialpost.com/tag/global-markets/), raising concerns about whether such dominance creates too much risk for investors’ portfolios. ![Financial Post](https://dcs-static.gprod.postmedia.digital/20.9.1/websites/images/identity/logo-identity-fp.svg) THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY Subscribe now to read the latest news in your city and across Canada. - Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others. - Daily content from Financial Times, the world's leading global business publication. - Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. - National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on. - Daily puzzles, including the New York Times Crossword. SUBSCRIBE TO UNLOCK MORE ARTICLES Subscribe now to read the latest news in your city and across Canada. - Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others. - Daily content from Financial Times, the world's leading global business publication. - Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. - National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on. - Daily puzzles, including the New York Times Crossword. REGISTER / SIGN IN TO UNLOCK MORE ARTICLES Create an account or sign in to continue with your reading experience. - Access articles from across Canada with one account. - Share your thoughts and join the conversation in the comments. - Enjoy additional articles per month. - Get email updates from your favourite authors. THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK. Create an account or sign in to continue with your reading experience. - Access articles from across Canada with one account - Share your thoughts and join the conversation in the comments - Enjoy additional articles per month - Get email updates from your favourite authors ## Sign In or Create an Account or [View more offers](https://financialpost.com/subscribe) Already a subscriber? **[Login](https://financialpost.com/sign-in/)** If you are a Home delivery print subscriber, online access is **included** in your subscription. [Activate your Online Access Now](https://financialpost.com/activate/) Article content [Wall Street](https://financialpost.com/tag/wall-street/) has raced ahead of international rivals over the past decade and a half, driven largely by a rally in the [tech sector,](https://financialpost.com/tag/tech-sector/) and particularly companies linked to [artificial intelligence](https://financialpost.com/tag/artificial-intelligence/), which is now worth almost as much as all the stocks in Europe combined. Article content ![Loading...](https://dcs-static.gprod.postmedia.digital/20.9.1/websites/images/common/icon-spinner-animated.svg) We apologize, but this video has failed to load. Try refreshing your browser, or [tap here to see other videos from our team](https://financialpost.com/video-centre/ "Video Centre"). ##### An AI pioneer on human vs artificial intelligence Back to video ![Close sticky video]() ![Loading...](https://dcs-static.gprod.postmedia.digital/20.9.1/websites/images/common/icon-spinner-animated.svg) We apologize, but this video has failed to load. Try refreshing your browser, or [tap here to see other videos from our team](https://financialpost.com/video-centre/ "Video Centre"). Pause Video An AI pioneer on human vs artificial intelligence 3 takeaways from a conversation with Nvidia AI expert Sanya Fidler. 0 of 1 minute, 31 secondsVolume 0% Press shift question mark to access a list of keyboard shortcuts Keyboard Shortcuts EnabledDisabled Shortcuts Open/Close/ or ? Play/PauseSPACE Increase Volume↑ Decrease Volume↓ Seek Forward→ Seek Backward← Captions On/Offc Fullscreen/Exit Fullscreenf Mute/Unmutem Decrease Caption Size\- Increase Caption Size\+ or = Seek %0-9 Next Up Alessia Cara on AI dupes of her music: ‘It freaks me out’ 02:20 Subtitle Settings Off English(US) Font Color White Font Opacity 100% Font Size 100% Font Family sans-serif Character Edge None Edge Color Black Background Color Black Background Opacity 75% Window Color Black Window Opacity 0% Reset White Black Red Green Blue Yellow Magenta Cyan 100% 75% 50% 25% 200% 175% 150% 125% 100% 75% 50% Arial Courier Georgia Impact Lucida Console Tahoma Times New Roman Trebuchet MS Verdana None Raised Depressed Uniform Drop Shadow White Black Red Green Blue Yellow Magenta Cyan White Black Red Green Blue Yellow Magenta Cyan 100% 75% 50% 25% 0% White Black Red Green Blue Yellow Magenta Cyan 100% 75% 50% 25% 0% Auto360p 1080p 720p 540p 360p 270p 180p Live 00:01 01:30 01:31 More Videos 02:20 Alessia Cara on AI dupes of her music: ‘It freaks me out’ 01:09 China company offers glimpse into how AI could help reduce impact of synthetic textile waste 01:01 Beware the risks of private markets, experts say 00:40 Iranians form human chains around power plants to protect them from US and Israeli attacks 02:02 Artemis II breaks Apollo 13’s distance record as humans travel farther from Earth than ever ... 01:01 AP top stories April 3 00:58 AP top stories April 3 00:39 Trump expects Iran war to end in 'maybe' 2-3 weeks 01:09 3 state troopers plead not guilty to charges connected to death of recruit after boxing match 01:13 Donald Trump Jr. criticizes the European Union during a trip to Bosnia Close Article content Article content But a recent pullback in tech shares has underlined the growing nervousness around soaring valuations in a market that has swallowed an ever larger share of global investors’ allocations. Article content ![FP Investor Banner](https://dcs-static.gprod.postmedia.digital/20.9.1/websites/images/newsletters/icon-fp-investor.svg) Investor Canada's best source for investing news, analysis and insight. By signing up you consent to receive the above newsletter from Postmedia Network Inc. Thanks for signing up\! A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Investor will soon be in your inbox. We encountered an issue signing you up. Please try again Interested in more newsletters? [Browse here.](https://financialpost.com/newsletters) Article content “If you hold a global tracker then by definition two-thirds of that is the U.S., and a lot of that is in [Silicon Valley](https://financialpost.com/tag/silicon-valley/) specifically,” said Paul Marsh, a professor of finance at London Business School who has spent the past 25 years tracking long-run investment returns. Article content “That means you’re very vulnerable to this huge bet on AI.” Article content Consistent returns have helped the U.S. stock market balloon in size since 2010, with the country’s share of global free-float market capitalization climbing from about 40 per cent in the aftermath of the global financial crisis to more than 64 per cent by 2025. Article content The U.S. has held the title of the [world’s largest stock market](https://financialpost.com/tag/u-s-economy/) for much of the past century, having edged ahead of the United Kingdom — the dominant market during the 19th century — by the early 1900s. Article content By its peak in the late 1960s, the U.S. made up more than 70 per cent of the global investable market, according to the UBS Global Investment Returns Yearbook. Article content Article content This high point was driven by America’s booming postwar economy, but also a relative lack of competition: Most of today’s “emerging markets” were yet to develop significant stock markets. Article content Read More 1. [![No one knows what will go down, but if you make a conscious decision to take risk off the table in advance, you ought to be able to handle almost any drawdown after you’ve made the changes, writes John De Goey.](https://smartcdn.gprod.postmedia.digital/financialpost/wp-content/uploads/2025/02/0226-mg-panic.jpg?h=96&strip=all&quality=5&sig=cal77saLdDjugGDeN0emvA) How can I shield investments from my instinct to panic sell?](https://financialpost.com/fp-answers/protect-investments-from-panic) 2. [![A sign for a Nvidia Corp. office building in Santa Clara, Calif.](https://smartcdn.gprod.postmedia.digital/financialpost/wp-content/uploads/2025/02/no0227nvidia.jpg?h=96&strip=all&quality=5&sig=CBN9a8xJJUF_PbWAnoxzNg) Nvidia, Salesforce leave bulls wanting as AI trade stalls](https://financialpost.com/investing/nvidia-salesforce-bulls-wanting-ai-trade-stalls) 3. Advertisement 1 Story continues below This advertisement has not loaded yet, but your article continues below. Article content But the global crash of 1973-74 hit the U.S. particularly hard. Wall Street stocks did not climb back to their late 1960s peak for more than 20 years, according to Brunel University professor of banking and finance E Philip Davis. Article content This decline allowed a new global leader to emerge, albeit briefly: Japan became the only country in the past century to surpass the U.S. as the world’s largest stock market. The shift arose at the height of the late 1980s Japanese asset price bubble, which later burst. Article content The end of this speculative mania left foreign and domestic investors deeply skeptical about Japan’s equity markets, and its economy lay stagnant for decades. It was not until last year that the benchmark Nikkei 225 broke beyond its bubble-era peak. Article content “Every now and then, finance goes off the rails and that happened in Japan. People get overenthusiastic, everybody feels rich, but then it turns out to be a house of cards,” said Richard Sylla, professor emeritus of economics at NYU Stern School of Business. Advertisement 1 This advertisement has not loaded yet. Trending 1. 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[Canadian pension plans are so healthy that employers are taking a contribution 'holiday,' says Mercer](https://financialpost.com/personal-finance/retirement/canadian-employers-taking-pension-contribution-holidays) [![pension plans](https://smartcdn.gprod.postmedia.digital/financialpost/wp-content/uploads/2026/04/pensions-0407-ph.jpg?quality=5&strip=all&w=100&sig=Xb1vrJ3CjFEiauqdZN9vuw)](https://financialpost.com/personal-finance/retirement/canadian-employers-taking-pension-contribution-holidays) [Retirement](https://financialpost.com/category/personal-finance/retirement/) 5. [Oil and gas prices plunge after U.S. and Iran agree to ceasefire](https://financialpost.com/commodities/energy/oil-gas/oil-gas-prices-plunge-u-s-iran-agree-ceasefire) [![A derek pumps in a Kuwait oil field. Brent crude fell as much as 16 per cent after news of the ceasefire between the U.S. and Iran.](https://smartcdn.gprod.postmedia.digital/financialpost/wp-content/uploads/2026/04/oil-well-0408-ph.jpg?quality=5&strip=all&w=100&sig=C0BJbGnIdVVTW_dXjEsFlA)](https://financialpost.com/commodities/energy/oil-gas/oil-gas-prices-plunge-u-s-iran-agree-ceasefire) [Oil & Gas](https://financialpost.com/category/commodities/energy/oil-gas/) 6. [Canada's accountant shortage is starting to add up despite quieter tax season](https://financialpost.com/personal-finance/accountant-shortage-starting-to-add-up) [![Canada faces a shortage of accountants this tax season.](https://smartcdn.gprod.postmedia.digital/financialpost/wp-content/uploads/2026/04/canada-taxes-0407-ph.jpg?quality=5&strip=all&w=100&sig=BUi9KDKoD86tGvf-JWPhmQ)](https://financialpost.com/personal-finance/accountant-shortage-starting-to-add-up) [Personal Finance](https://financialpost.com/category/personal-finance/) Advertisement 2 Advertisement This advertisement has not loaded yet, but your article continues below. Article content Parallels between today’s stock market and these historical crashes are making some investors uneasy. Article content “The No. 1 question I get asked at the moment is around what to do about the U.S. stock market,” said Duncan Lamont, head of strategic research at U.K. fund manager Schroder Investment Management. Article content However, the “striking persistence” of the U.S. equity market’s performance since 2008 makes it difficult to push against the trend, because “naysayers have been wrong many times over,” he said. Article content The S\&P 500 index has delivered average annual returns of about 14 per cent since 2010, outstripping all other major national benchmarks. That performance was bolstered by gains of more than 20 per cent in both 2023 and 2024, as excitement about AI pushed U.S.-listed megacap technology stocks, such as chipmaker Nvidia Corp., to record highs. Article content The start of 2025 has brought a rare bout of Wall Street underperformance, as relatively unloved European markets play catch-up. Article content U.S. dominance is also a consequence of foreign companies, particularly in the tech sector, choosing to list in New York in search of higher valuations. Article content Article content Some investors argue this trend has brought many of the world’s best companies to the U.S. and will make the market more resilient to an economic downturn. Article content “I can pretty much build a global portfolio just relying on U.S. markets,” said Jack Ablin, chief investment officer at private investment firm Cresset Capital. Article content But, for others, it is not just the outsize role of the U.S. market but also its concentration in a small number of stocks that is fraying nerves. In particular, skeptics point to the huge gains of many Silicon Valley giants, which Torsten Slok, chief economist at private capital group Apollo Global Management Inc., said had become “ridiculously overvalued.” Article content The [Magnificent Seven group of giant technology stocks](https://financialpost.com/tag/magnificent-seven-stocks/)— Apple Inc., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corp., Nvidia and Tesla Inc. — hold almost a third of the S\&P 500’s US\$51.8 trillion market value, while the index’s cyclically adjusted price-to-earnings ratio, a measure of valuation, is approaching its highest level since the early 2000s. Article content “Periods come and go where bubbles start to form. And we are in a bubble today in the U.S., and a bubble in the tech world,” said Slok. Article content Article content Bullish investors argue that Big Tech’s strong earnings growth and AI’s potential to spur productivity justify the lofty valuations of many of the world’s largest companies. Bearish commentators, meanwhile, draw comparisons between today’s market and the dotcom bubble that burst at the beginning of the millennium. Article content Investor confidence was shaken in January when China’s DeepSeek unveiled AI advances apparently achieved using far less computing power than U.S. tech groups, casting doubt on the need for the vast capital expenditures made by Magnificent Seven companies. Article content This month, renewed jitters have hit the tech sector, pulling the U.S. market back slightly from all-time highs. Article content This is not the first time that one sector has overwhelmed Wall Street. In the 1800s, railroad companies’ hunger for investment played a central role in the early development of the U.S. stock market. By 1900, they represented more than 60 per cent of market value. Article content “Artificial intelligence is the wave of the future right now, but a hundred years ago the wave of the future was rail companies. Then we had a wave of everybody buying electricity companies,” said Stern’s Sylla. Article content The relative decline of a dominant industry is not necessarily bad news for investors. An investor who held railroad shares since 1900 would have outperformed the broader U.S. market, according to research by Marsh in 2015. That is despite the fact that railroads’ overall share of the market declined as companies from a plethora of other industries joined. Article content Even so, today’s tech dominance — and U.S. dominance — has left many investors nervous that even a portfolio tracking a broad spread of global shares leaves them with too many eggs in one basket. Article content “The bottom line is that if I open Page One in my finance textbook, it says that I should diversify,” said Slok. 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[Home](https://financialpost.com/) 2. [Financial Times](https://financialpost.com/category/financial-times/) 3. [Investor](https://financialpost.com/category/investing/) ## How big is the stock market's America bubble? The U.S. has grown to nearly two-thirds of global equity market value, but some analysts see danger in the 'huge bet on AI' Author of the article: ![Financial Times](https://secure.gravatar.com/avatar/f90f4d3897ea8b2a0fa40a23bed95d16?s=70&d=mp) You can save this article by registering for free [here](https://financialpost.com/register/). Or [sign-in](https://financialpost.com/sign-in/) if you have an account. ![Today's tech dominance on Wall Street has left many investors nervous that even a portfolio tracking a broad spread of global shares leaves them with too many eggs in one basket.](https://smartcdn.gprod.postmedia.digital/financialpost/wp-content/uploads/2025/03/0305-mg-stock-bubble.jpg?quality=90&strip=all&w=288&h=216&sig=K3v46XKJojqqf0JV0QoShA) Today's tech dominance on Wall Street has left many investors nervous that even a portfolio tracking a broad spread of global shares leaves them with too many eggs in one basket. Photo by JOHANNES EISELE/AFP/Getty Images files United States stocks’ huge surge since the global financial crisis means they account for almost two-thirds of the [world’s investable market](https://financialpost.com/tag/global-markets/), raising concerns about whether such dominance creates too much risk for investors’ portfolios. ![Financial Post](https://dcs-static.gprod.postmedia.digital/20.9.1/websites/images/identity/logo-identity-fp.svg) Subscribe now to read the latest news in your city and across Canada. - Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others. - Daily content from Financial Times, the world's leading global business publication. - Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. - National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on. - Daily puzzles, including the New York Times Crossword. Subscribe now to read the latest news in your city and across Canada. - Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others. - Daily content from Financial Times, the world's leading global business publication. - Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. - National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on. - Daily puzzles, including the New York Times Crossword. Create an account or sign in to continue with your reading experience. - Access articles from across Canada with one account. - Share your thoughts and join the conversation in the comments. - Enjoy additional articles per month. - Get email updates from your favourite authors. Create an account or sign in to continue with your reading experience. - Access articles from across Canada with one account - Share your thoughts and join the conversation in the comments - Enjoy additional articles per month - Get email updates from your favourite authors ## Sign In or Create an Account or [Wall Street](https://financialpost.com/tag/wall-street/) has raced ahead of international rivals over the past decade and a half, driven largely by a rally in the [tech sector,](https://financialpost.com/tag/tech-sector/) and particularly companies linked to [artificial intelligence](https://financialpost.com/tag/artificial-intelligence/), which is now worth almost as much as all the stocks in Europe combined. But a recent pullback in tech shares has underlined the growing nervousness around soaring valuations in a market that has swallowed an ever larger share of global investors’ allocations. ![FP Investor Banner](https://dcs-static.gprod.postmedia.digital/20.9.1/websites/images/newsletters/icon-fp-investor.svg) Canada's best source for investing news, analysis and insight. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Investor will soon be in your inbox. We encountered an issue signing you up. Please try again “If you hold a global tracker then by definition two-thirds of that is the U.S., and a lot of that is in [Silicon Valley](https://financialpost.com/tag/silicon-valley/) specifically,” said Paul Marsh, a professor of finance at London Business School who has spent the past 25 years tracking long-run investment returns. “That means you’re very vulnerable to this huge bet on AI.” Consistent returns have helped the U.S. stock market balloon in size since 2010, with the country’s share of global free-float market capitalization climbing from about 40 per cent in the aftermath of the global financial crisis to more than 64 per cent by 2025. The U.S. has held the title of the [world’s largest stock market](https://financialpost.com/tag/u-s-economy/) for much of the past century, having edged ahead of the United Kingdom — the dominant market during the 19th century — by the early 1900s. By its peak in the late 1960s, the U.S. made up more than 70 per cent of the global investable market, according to the UBS Global Investment Returns Yearbook. This high point was driven by America’s booming postwar economy, but also a relative lack of competition: Most of today’s “emerging markets” were yet to develop significant stock markets. But the global crash of 1973-74 hit the U.S. particularly hard. Wall Street stocks did not climb back to their late 1960s peak for more than 20 years, according to Brunel University professor of banking and finance E Philip Davis. This decline allowed a new global leader to emerge, albeit briefly: Japan became the only country in the past century to surpass the U.S. as the world’s largest stock market. The shift arose at the height of the late 1980s Japanese asset price bubble, which later burst. The end of this speculative mania left foreign and domestic investors deeply skeptical about Japan’s equity markets, and its economy lay stagnant for decades. It was not until last year that the benchmark Nikkei 225 broke beyond its bubble-era peak. “Every now and then, finance goes off the rails and that happened in Japan. People get overenthusiastic, everybody feels rich, but then it turns out to be a house of cards,” said Richard Sylla, professor emeritus of economics at NYU Stern School of Business. Parallels between today’s stock market and these historical crashes are making some investors uneasy. “The No. 1 question I get asked at the moment is around what to do about the U.S. stock market,” said Duncan Lamont, head of strategic research at U.K. fund manager Schroder Investment Management. However, the “striking persistence” of the U.S. equity market’s performance since 2008 makes it difficult to push against the trend, because “naysayers have been wrong many times over,” he said. The S\&P 500 index has delivered average annual returns of about 14 per cent since 2010, outstripping all other major national benchmarks. That performance was bolstered by gains of more than 20 per cent in both 2023 and 2024, as excitement about AI pushed U.S.-listed megacap technology stocks, such as chipmaker Nvidia Corp., to record highs. The start of 2025 has brought a rare bout of Wall Street underperformance, as relatively unloved European markets play catch-up. U.S. dominance is also a consequence of foreign companies, particularly in the tech sector, choosing to list in New York in search of higher valuations. Some investors argue this trend has brought many of the world’s best companies to the U.S. and will make the market more resilient to an economic downturn. “I can pretty much build a global portfolio just relying on U.S. markets,” said Jack Ablin, chief investment officer at private investment firm Cresset Capital. But, for others, it is not just the outsize role of the U.S. market but also its concentration in a small number of stocks that is fraying nerves. In particular, skeptics point to the huge gains of many Silicon Valley giants, which Torsten Slok, chief economist at private capital group Apollo Global Management Inc., said had become “ridiculously overvalued.” The [Magnificent Seven group of giant technology stocks](https://financialpost.com/tag/magnificent-seven-stocks/)— Apple Inc., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corp., Nvidia and Tesla Inc. — hold almost a third of the S\&P 500’s US\$51.8 trillion market value, while the index’s cyclically adjusted price-to-earnings ratio, a measure of valuation, is approaching its highest level since the early 2000s. “Periods come and go where bubbles start to form. And we are in a bubble today in the U.S., and a bubble in the tech world,” said Slok. Bullish investors argue that Big Tech’s strong earnings growth and AI’s potential to spur productivity justify the lofty valuations of many of the world’s largest companies. Bearish commentators, meanwhile, draw comparisons between today’s market and the dotcom bubble that burst at the beginning of the millennium. Investor confidence was shaken in January when China’s DeepSeek unveiled AI advances apparently achieved using far less computing power than U.S. tech groups, casting doubt on the need for the vast capital expenditures made by Magnificent Seven companies. This month, renewed jitters have hit the tech sector, pulling the U.S. market back slightly from all-time highs. This is not the first time that one sector has overwhelmed Wall Street. In the 1800s, railroad companies’ hunger for investment played a central role in the early development of the U.S. stock market. By 1900, they represented more than 60 per cent of market value. “Artificial intelligence is the wave of the future right now, but a hundred years ago the wave of the future was rail companies. Then we had a wave of everybody buying electricity companies,” said Stern’s Sylla. The relative decline of a dominant industry is not necessarily bad news for investors. An investor who held railroad shares since 1900 would have outperformed the broader U.S. market, according to research by Marsh in 2015. That is despite the fact that railroads’ overall share of the market declined as companies from a plethora of other industries joined. Even so, today’s tech dominance — and U.S. dominance — has left many investors nervous that even a portfolio tracking a broad spread of global shares leaves them with too many eggs in one basket. “The bottom line is that if I open Page One in my finance textbook, it says that I should diversify,” said Slok. “People are looking at their holdings . . . and asking a very, very fundamental question, namely: ‘Am I diversified?’ And the answer today to that question is a very, very clear no.” *© 2025 The Financial Times Ltd* Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about [cookies here](https://financialpost.com/cookie-policy/). 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