BCGE flags AI-driven earnings boom may mask stretched valuations as growth normalizes

BCGE flagged limits in 12-month forward P/E ratios for AI-linked stocks, arguing profit growth is unusually inflated and may mask valuation risk.

Nasdaq-100 trades near 21x earnings, down from almost 100x in the late-1990s tech bubble, within the 20-30x range since 2020.

Rising competition, including from China, could compress margins as AI performance reaches “good enough,” shifting focus to where growth “lands.”

Nvidia profit rose from about USD 10 billion in 2022 to USD 30 billion in 2024, reaching USD 106 billion in 2026.

Market expectations imply Nvidia profit of USD 353 billion in 2028, raising the key question of how long exceptional growth persists.