Everyone’s watching AI, but the real bubbles are hidden elsewhere. The numbers tell a story no one wants to hear.
The market’s big mistake? Looking where the spotlight is brightest. The market’s attention is now captivated by a single spotlight: technology. Phrases like "AI company valuations are at levels last seen before the dot-com bubble." are repeated everywhere, and every hint of Nvidia becomes headline news.
Small spoiler: as often happens, all the attention is in the wrong place. The truth is that, if you look at the numbers, the "AI bubble" narrative only holds up on the surface. While investors debate NVDA’s forward multiples, there are other sectors that are showing much more dangerous symptoms. But before understanding which ones, it’s important to clarify that a bubble is born when prices systematically decouple from fundamentals, when future expectations become excessive compared to measurable economic reality. So are we sure that AI is in a bubble? Or are there other sectors worth keeping an eye on?
Here are 3 situations to keep in mind.
1) AI: Overvalued or Simply Early?
Yes, AI sector P/Es are at their highest levels in twenty years. The Shiller CAPE ratio is well above its historical average, and the Nasdaq is moving as if the future were already written. But unlike the dot-com bubble, this time companies are producing real profits, and especially double-digit growth.
Margins are wide, and the earnings compounding effect—the ability to reinvest profits to generate additional earnings—amplifies long-term potential.
Put another way: yes, perhaps there is overvaluation in the short term, but can we really call it a bubble when cash flows show sustainable organic growth?
When the time horizon is extended to 5-10 years, forward multiples become surprisingly reasonable.
The market, ultimately, is simply pricing in future leadership in a sector that defines the entire value chain of the digital economy. So, if AI isn’t (yet) a bubble, where are the real ones?
2) Quantum computing: the revolution that’s moving too fast
The first candidate is quantum computing.
A fascinating, revolutionary, and largely experimental sector. But precisely for this reason, it’s also a perfect reflection of market sentiment. The prices of quantum computing companies, from D-Wave to IonQ, have moved almost parabolically, often without revenues justifying such enthusiasm.
The problem is clear: revenues are still low, profits are nonexistent, and P/S ratios are at record levels. Valuations are based solely on theoretical growth expectations, not on consolidated data. In more technical terms, there is no sustainable compounding of returns yet: there are no profits to reinvest, nor truly active economies of scale. This is what defines a nascent bubble: when the promise is too far ahead of reality.
It’s as if the market wanted to anticipate the impact of quantum computing on global productivity by ten years. But history teaches us that even technological revolutions require time, investment, and, above all, real profits to become sustainable.
In short: the sector is promising, but valuations are pricing it as if the future were already here. And when multiples are too far ahead of their time, disappointment becomes inevitable.
3) Mining: the cyclicality the market tends to forget
The second sector at risk concerns mining companies: gold, silver, and even Bitcoin. In recent months, the rally in commodities has pushed the market to price these companies as if they were growth stocks with steady free cash flow and rising valuation multiples. But herein lies the structural flaw: mining is, by definition, a cyclical sector.
When the underlying asset—be it gold, silver, or Bitcoin—cools, margins collapse. Yet, forward multiples today imply a stability in cash flows that has never existed historically. An example? Some gold companies trade at P/E ratios above 25, levels typical of tech stocks, not precious metals producers.
This distortion stems from excessive optimism about commodity performance and an overly linear view of the economic cycle. Investors forget that a reversal in interest rates or a cooling inflation can drastically reduce demand for safe-haven assets. And when that happens, mean reversion is brutal.
The risk, therefore, is not an immediate collapse, but a repricing of risk: when the market realizes it’s not buying growth, but cyclical volatility, multiples quickly compress.
The real bubble is the perception of risk itself
Three sectors, three different realities: but a common thread. One, AI, appears overvalued, but with solid fundamentals. The other two, quantum computing and mining, instead display the typical characteristics of mispriced assets (or sectors): overly high expectations, fragile fundamentals, and a dominant narrative.
This doesn’t mean they’re destined to collapse tomorrow, nor that AI is immune to corrections. It just means the market could, once again, be looking in the wrong direction. Because bubbles don’t burst when everyone sees them. They burst when everyone thinks they’ve already spotted them elsewhere.
Original article published on Money.it Italy 2025-10-23 07:52:00. Original title: Non solo AI. 3 bolle speculative pronte a scoppiare sui mercati
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