<p>Main US indexes green, but off highs; Nasdaq out front, up ~1%</p>
<p>Cons Disc leads S&amp;P sector gainers; Energy off most</p>
<p>Euro STOXX 600 index up ~1%</p>
<p>Dollar up; crude rises ~1%; bitcoin, gold slip</p>
<p>US 10-year Treasury yield edges down to ~4.12% Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at</p>
<h3>AI BUBBLE, BUBBLE EVERYWHERE, WELL, MAYBE, MAYBE NOT</h3>
<p>“The artificial intelligence (AI) investment landscape presents a nuanced picture that defies simple bubble characterization.” At least that’s how Jack Ablin, founding partner and chief investment officer at Cresset, sees it.</p>
<p>According to Ablin, while valuations appear frothy amid pervasive speculation, today’s AI cycle is meaningfully different from what occurred in the dot-com era.</p>
<p>“Profitable operations, robust cash generation, and measurable revenue growth underpin the sector’s strength. However, a critical divergence has emerged between massive infrastructure spending, $400+ billion annually, and limited enterprise monetization success, creating significant risks for 2026 equity markets,” writes Ablin in a note.</p>
<p>Ablin admits that AI sector valuations are elevated, but he says they remain structurally different from dot-com peak levels. For example, he says that NVIDIA  (NVDA.O)  trades at about 44–47 times past earnings and 24–26 times expected earnings, well below Cisco’s  (CSCO.O)  472 times earnings at the market peak in March 2000.</p>
<p>Additionally, the “Magnificent Seven” trade at roughly 28 times expected earnings, which is about half the tech sector’s valuation during the dot-com era. Meanwhile, the S&amp;P 500 trades at around 26 times expected earnings, which is near a 20-year high.</p>
<p>That said, Ablin points to concerns over whether AI spending is actually paying off, along with issues around concentration risk within the overall ecosystem, as well as a recent shift in sentiment toward the group.</p>
<p>Ablin’s bottom line is that the AI investment landscape sits at a critical inflection point entering 2026. “While the AI sector shows familiar signs of a bubble, lofty valuations, heavy capital inflows, and speculative behavior, its strong profits, consistent revenue growth, and cash-funded infrastructure investments point to a selective correction rather than a systemic collapse.”</p>
<p>He believes the next 18 months will reveal whether today’s infrastructure buildout proves to be a platform for lasting innovation, or “one of the largest capital misallocations in market history.”</p>
<p>Therefore, he recommends investors position defensively through diversified infrastructure exposure while avoiding highly leveraged plays until monetization metrics demonstrate sustainable improvement. “There’s a small risk that if pilot failure rates persist, the sector could face a bear market with applications companies most vulnerable. The next four quarters of earnings guidance will provide critical data points,” he writes.</p>
<p>(Terence Gabriel)</p>
<h3>EARLIER ON LIVE MARKETS:</h3>
<h3>HAVE YOURSELF A DUAL MANDATE CHRISTMAS: CPI, JOBLESS CLAIMS, PHILLY FED  US STOCKS RALLY AFTER INFLATION, JOBS DATA CLICK HERE US STOCK FUTURES ADD TO GAINS AFTER LATEST INFLATION NUMBERS CLICK HERE</h3>
<h3>UBS USING AI TO TRACK CENBANK POLICYMAKERS’ TONE MORGAN STANLEY SEES 22% UPSIDE FOR EUROPEAN BANKS NEXT YEAR CLICK HERE STOXX FLAT, ‘HOPE AND WARINESS’ AROUND BP CLICK HERE BEFORE THE BELL: MICRON SOOTHES TECH NERVES, EUROPE MIXED CLICK HERE BOE TO MAKE THE CUT AS OTHERS STAY THE COURSE CLICK HERE</h3>

NVDA

<p>Jack Ablin of Cresset describes the AI investment landscape as nuanced, with frothy valuations but strong profits and revenue growth. He notes a divergence between infrastructure spending and monetization success, posing risks for 2026. Ablin advises defensive positioning and warns of potential bear market risks if monetization fails. The next 18 months are crucial for determining the sector's future.</p>

- US indexes are showing gains, led by the Nasdaq, while the Euro STOXX 600 index also rises approximately 1%.  
- Jack Ablin suggests that the AI investment landscape differs from the dot-com bubble, with strong profits and revenue growth despite elevated valuations and significant infrastructure spending.  
- He advises investors to adopt a defensive stance while monitoring the next 18 months for signs of sustainable innovation or potential capital misallocations in the sector.

LIVE MARKETS-AI bubble, bubble everywhere, well, maybe, maybe not