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Saturday 14 Feb 2026 [](https://theedgemalaysia.com/askedge/) BURSA SGX 1. [Home](https://theedgemalaysia.com/) [Edge Weekly](https://theedgemalaysia.com/flash-categories/Edge%20Weekly)  This article first appeared in Forum, The Edge Malaysia Weekly on September 1, 2025 - September 7, 2025 As Big Tech companies’ share prices continue to rise and high-profile initial price offerings (IPOs) return, are we in an artificial intelligence (AI) boom like the 2000 Nasdaq tech boom and bust? Nvidia, the largest producer of data centre graphic processing units, saw its market cap first hit US\$1 trillion in 2023, and just this month it became the first company to surpass US\$4.4 trillion (RM18.5 trillion), making it the world’s most valuable company. Microsoft, which is also heavily invested in AI software, has a market cap of US\$3.8 trillion. Meanwhile, the market excitement is fuelled by potential IPOs from Big Tech-backed AI start-ups such as OpenAI, Anthropic, Cohere, Databricks, Scale AI and Perplexity. These start-ups have been valued at more than US\$103 billion in venture funding. Morgan Stanley projects that AI could add US\$16 trillion in S\&P 500 stock market value. By comparison, the Magnificent Seven: Apple, Nvidia, Microsoft, Amazon, Tesla, Alphabet (Google), and Meta (Facebook) were valued at US\$19 trillion in July 2025, accounting for 34% of the S\&P 500’s total market cap. With the S\&P 500 hitting record highs, the US stock market is today 213% of gross domestic product (GDP), higher than the last peak of 153% in 1999. Led also somewhat by tech stocks, China’s A shares, the renminbi-denominated Chinese stocks, have outperformed the S\&P 500 by 15% over the past 12 months, despite slower GDP growth. The issue of whether the tech boom has more legs to run depends on the technical valuations. The US S\&P 500 forward price-earnings ratio (PER) is currently at 23 times, just below the highest valuation of 24 times forward earnings during the dot-com bubble in 2000. At the height of the dot-com bubble, the total market value of US equities was about three times the money supply. Today, that ratio is again approaching comparable levels. In addition, the amount of investors trading on margin has reached over US\$1 trillion in debit balances, as shown by July 2025 data from the Financial Industry Regulatory Authority. Markets fuelled by margin trading are signs of market froth because sudden reversals of margin credit tend to lead to flash crashes. The US tech companies are attracting massive inflows of capital because they are also investing heavily in building AI infrastructure, which is driving almost half of the global economy’s growth this year. The earnings power of the Magnificent Seven grew 27.7% for the first quarter of 2025 compared with the same quarter of 2024, while their forward PER is 28 times. Although Alphabet, Amazon, and Nvidia account for most of the gains, they need the Chinese market because China is the world’s largest consumer base for digital services. E-commerce platforms such as Alibaba and Pinduoduo are not only digital marketplaces but also building AI ecosystems that integrate cloud services with consumer data analytics, which requires specialised AI chips. Asian equity markets have expanded significantly since 2000, now accounting for 27% of global market cap, with China playing a major role in this growth. While the Asian private equity and venture capital funds are not as mature and sophisticated as their American counterparts, Asian markets rely also on sovereign wealth funds, provincial investment vehicles and, today, insurance companies to boost investments in tech companies. However, Asian equity valuations have been relatively subdued, partly due to persistently low price-to-book ratios. Chinese tech stocks are valued significantly lower than their Taiwanese peers. In addition, earnings in China’s hard tech segment (semiconductor chip and equipment manufacturers) are significantly constrained compared to software tech platform companies such Alibaba, JD.com, Meituan, and Tencent. Based upon various studies, AI revenues are rising 60%-70% at the chip level, 25%-30% at foundries, and 5%-10% at the equipment level. The AI economy is still in the stage of building infrastructure, training large language models, building data centres, and so on. Large tech companies are often the engineers of a tech boom, using their innovation, market power and capital to set ambitious growth expectations. Meanwhile, smaller tech companies, eager to get to scale quickly, struggle to raise money to keep up with the Big Tech platforms. Many US small caps are trading at a forward PER of 14 times, compared to large caps of 20 times. About a third of the small caps in the Russell 2000 Index reported losses on their annual earnings per share. In short, the AI boom seems to be highly concentrated at the Big Tech level. The tech sector cannot escape the impact of US tariff uncertainties. Since revenue is largely concentrated in chip design, if the US really implements tariff rates, such as 300% on semiconductors as proposed by President Donald Trump, there could be a delayed market crunch in demand, undermining the revenue growth for high-valuation tech companies. Even though the market is already beginning to accept that the US Federal Reserve (Fed) will begin to cut interest rates in the near future, the lack of a US-China trade settlement adds uncertainty, because if tech earnings are sharply affected, their valuations cannot be sustained. Most experts agree that when AI begins to diffuse across the economy, it could improve productivity by cutting costs, creating higher corporate earnings, generating rapid growth and large returns. What we do not know is whether the cutting of expenditure, including jobs made redundant by AI, could have medium- to long-term drag on AI investor optimism. Consequently, using the Gold Rush as an example, many investors focus on those companies providing picks and shovels to AI enablers, rather than the AI pioneers (gold diggers). However, semiconductor scaling could be rapidly approaching a physical limit, reaching a stage where nobody knows how transformative the technology will be. In this uncertainty, abundant and easy capital (through relatively easy monetary policy and very loose fiscal policy in all the major countries) are creating the conditions for a classic bubble. Market bulls are not only optimistic about lower interest rates through Fed cuts, but also profusely excited about generative AI and quantum computing that are just emerging. What could pour cold water on such enthusiasm? US tech companies are not only valued for their hyper growth but also deeply connected to the global supply chain, with Nvidia, Apple and Alphabet relying heavily on foreign suppliers for critical components. Tech companies need rare earth for continued production. Last month, Nvidia increased its Chinese orders from Taiwan Semiconductor Manufacturing Company to meet surging demand. However, on Aug 22, the Chinese government instructed its domestic companies to reduce dependence on Nvidia chips, directly impacting the company’s growth narrative. According to Morgan Stanley Research, China’s AI industry is projected to reach a market size of US\$140 billion by 2030. Chinese efforts to rapidly increase domestic production and reduce foreign purchases not only reduces a key revenue stream for US tech companies, but also impacts on overall economic growth. Defensive investors who are worried about how to manage in a possible bubble situation should read Father of Value-Investing Benjamin Graham’s Seven Criteria on Defensive Investing: (i) He preferred large cap stocks because under market correction, small cap stocks are more volatile and illiquid; (ii) He preferred companies with respectable current ratios with good cash flow and liquidity; (iii) Check the revenue growth track record; (iv) Good defensive stocks pay dividends; (v) Look for companies with good earnings (bottom line) growth; (vi) Look at those with a PER over three years of not more than 15 times (it does vary across industries); and (vii) Price-to-asset ratio, which is dated because tech companies have small hard assets and more soft talent and research and development intangibles. I think Warren Buffett would have added the quality of management and its trustworthiness into the valuation game. What we do know is that stock market valuations, especially in the US, are historically high. But no one can say when the trigger for a correction will come. It pays to remember that in the railway, radio and earlier booms, the favoured stocks did not always survive their investor expectations. Who remembers RCA? In this phase of the market, the only sound advice is caveat emptor — it’s your money that is at risk. Invest wisely. *** *Tan Sri Andrew Sheng writes on global issues from an Asian perspective. Loh Peixin is a research associate at the George Town Institute of Open and Advanced Studies, Wawasan Open University. The authors are engaged in a major study of the tech industry in Penang.* Save by [subscribing](https://subscribe.theedgemalaysia.com/) to us for your print and/or digital copy. **P/S: The Edge is also available on [Apple's App Store](https://itunes.apple.com/us/app/the-edge-markets/id990567068?ls=1&mt=8) and [Android's Google Play](https://play.google.com/store/apps/details?id=com.bizedge.theedgemarkets.malaysia).** - Most Read - Just In Copyright © 1999-2026 The Edge Communications Sdn. Bhd. 199301012242 (266980-X). All rights reserved  Print  Text Size  Share

This article first appeared in Forum, The Edge Malaysia Weekly on September 1, 2025 - September 7, 2025 As Big Tech companies’ share prices continue to rise and high-profile initial price offerings (IPOs) return, are we in an artificial intelligence (AI) boom like the 2000 Nasdaq tech boom and bust? Nvidia, the largest producer of data centre graphic processing units, saw its market cap first hit US\$1 trillion in 2023, and just this month it became the first company to surpass US\$4.4 trillion (RM18.5 trillion), making it the world’s most valuable company. Microsoft, which is also heavily invested in AI software, has a market cap of US\$3.8 trillion. Meanwhile, the market excitement is fuelled by potential IPOs from Big Tech-backed AI start-ups such as OpenAI, Anthropic, Cohere, Databricks, Scale AI and Perplexity. These start-ups have been valued at more than US\$103 billion in venture funding. Morgan Stanley projects that AI could add US\$16 trillion in S\&P 500 stock market value. By comparison, the Magnificent Seven: Apple, Nvidia, Microsoft, Amazon, Tesla, Alphabet (Google), and Meta (Facebook) were valued at US\$19 trillion in July 2025, accounting for 34% of the S\&P 500’s total market cap. With the S\&P 500 hitting record highs, the US stock market is today 213% of gross domestic product (GDP), higher than the last peak of 153% in 1999. Led also somewhat by tech stocks, China’s A shares, the renminbi-denominated Chinese stocks, have outperformed the S\&P 500 by 15% over the past 12 months, despite slower GDP growth. The issue of whether the tech boom has more legs to run depends on the technical valuations. The US S\&P 500 forward price-earnings ratio (PER) is currently at 23 times, just below the highest valuation of 24 times forward earnings during the dot-com bubble in 2000. At the height of the dot-com bubble, the total market value of US equities was about three times the money supply. Today, that ratio is again approaching comparable levels. In addition, the amount of investors trading on margin has reached over US\$1 trillion in debit balances, as shown by July 2025 data from the Financial Industry Regulatory Authority. Markets fuelled by margin trading are signs of market froth because sudden reversals of margin credit tend to lead to flash crashes. The US tech companies are attracting massive inflows of capital because they are also investing heavily in building AI infrastructure, which is driving almost half of the global economy’s growth this year. The earnings power of the Magnificent Seven grew 27.7% for the first quarter of 2025 compared with the same quarter of 2024, while their forward PER is 28 times. Although Alphabet, Amazon, and Nvidia account for most of the gains, they need the Chinese market because China is the world’s largest consumer base for digital services. E-commerce platforms such as Alibaba and Pinduoduo are not only digital marketplaces but also building AI ecosystems that integrate cloud services with consumer data analytics, which requires specialised AI chips. Asian equity markets have expanded significantly since 2000, now accounting for 27% of global market cap, with China playing a major role in this growth. While the Asian private equity and venture capital funds are not as mature and sophisticated as their American counterparts, Asian markets rely also on sovereign wealth funds, provincial investment vehicles and, today, insurance companies to boost investments in tech companies. However, Asian equity valuations have been relatively subdued, partly due to persistently low price-to-book ratios. Chinese tech stocks are valued significantly lower than their Taiwanese peers. In addition, earnings in China’s hard tech segment (semiconductor chip and equipment manufacturers) are significantly constrained compared to software tech platform companies such Alibaba, JD.com, Meituan, and Tencent. Based upon various studies, AI revenues are rising 60%-70% at the chip level, 25%-30% at foundries, and 5%-10% at the equipment level. The AI economy is still in the stage of building infrastructure, training large language models, building data centres, and so on. Large tech companies are often the engineers of a tech boom, using their innovation, market power and capital to set ambitious growth expectations. Meanwhile, smaller tech companies, eager to get to scale quickly, struggle to raise money to keep up with the Big Tech platforms. Many US small caps are trading at a forward PER of 14 times, compared to large caps of 20 times. About a third of the small caps in the Russell 2000 Index reported losses on their annual earnings per share. In short, the AI boom seems to be highly concentrated at the Big Tech level. The tech sector cannot escape the impact of US tariff uncertainties. Since revenue is largely concentrated in chip design, if the US really implements tariff rates, such as 300% on semiconductors as proposed by President Donald Trump, there could be a delayed market crunch in demand, undermining the revenue growth for high-valuation tech companies. Even though the market is already beginning to accept that the US Federal Reserve (Fed) will begin to cut interest rates in the near future, the lack of a US-China trade settlement adds uncertainty, because if tech earnings are sharply affected, their valuations cannot be sustained. Most experts agree that when AI begins to diffuse across the economy, it could improve productivity by cutting costs, creating higher corporate earnings, generating rapid growth and large returns. What we do not know is whether the cutting of expenditure, including jobs made redundant by AI, could have medium- to long-term drag on AI investor optimism. Consequently, using the Gold Rush as an example, many investors focus on those companies providing picks and shovels to AI enablers, rather than the AI pioneers (gold diggers). However, semiconductor scaling could be rapidly approaching a physical limit, reaching a stage where nobody knows how transformative the technology will be. In this uncertainty, abundant and easy capital (through relatively easy monetary policy and very loose fiscal policy in all the major countries) are creating the conditions for a classic bubble. Market bulls are not only optimistic about lower interest rates through Fed cuts, but also profusely excited about generative AI and quantum computing that are just emerging. What could pour cold water on such enthusiasm? US tech companies are not only valued for their hyper growth but also deeply connected to the global supply chain, with Nvidia, Apple and Alphabet relying heavily on foreign suppliers for critical components. Tech companies need rare earth for continued production. Last month, Nvidia increased its Chinese orders from Taiwan Semiconductor Manufacturing Company to meet surging demand. However, on Aug 22, the Chinese government instructed its domestic companies to reduce dependence on Nvidia chips, directly impacting the company’s growth narrative. According to Morgan Stanley Research, China’s AI industry is projected to reach a market size of US\$140 billion by 2030. Chinese efforts to rapidly increase domestic production and reduce foreign purchases not only reduces a key revenue stream for US tech companies, but also impacts on overall economic growth. Defensive investors who are worried about how to manage in a possible bubble situation should read Father of Value-Investing Benjamin Graham’s Seven Criteria on Defensive Investing: (i) He preferred large cap stocks because under market correction, small cap stocks are more volatile and illiquid; (ii) He preferred companies with respectable current ratios with good cash flow and liquidity; (iii) Check the revenue growth track record; (iv) Good defensive stocks pay dividends; (v) Look for companies with good earnings (bottom line) growth; (vi) Look at those with a PER over three years of not more than 15 times (it does vary across industries); and (vii) Price-to-asset ratio, which is dated because tech companies have small hard assets and more soft talent and research and development intangibles. I think Warren Buffett would have added the quality of management and its trustworthiness into the valuation game. What we do know is that stock market valuations, especially in the US, are historically high. But no one can say when the trigger for a correction will come. It pays to remember that in the railway, radio and earlier booms, the favoured stocks did not always survive their investor expectations. Who remembers RCA? In this phase of the market, the only sound advice is caveat emptor — it’s your money that is at risk. Invest wisely. *** *Tan Sri Andrew Sheng writes on global issues from an Asian perspective. Loh Peixin is a research associate at the George Town Institute of Open and Advanced Studies, Wawasan Open University. The authors are engaged in a major study of the tech industry in Penang.* Save by [subscribing](https://subscribe.theedgemalaysia.com/) to us for your print and/or digital copy. **P/S: The Edge is also available on [Apple's App Store](https://itunes.apple.com/us/app/the-edge-markets/id990567068?ls=1&mt=8) and [Android's Google Play](https://play.google.com/store/apps/details?id=com.bizedge.theedgemarkets.malaysia).**