Goldman Sachs dismisses market bubble fears, warns investors not to overleverage

According to Goldman Sachs, the ￰0￱ market hasn’t hit bubble levels yet, even with tech prices surging off the back of the artificial intelligence ￰1￱ the bank warned that investors should not get ￰2￱ everyone piles into stock tied to AI, the message from Goldman is simple: don’t be the last idiot holding the ￰3￱ is ￰4￱ are scrambling to talk up their strategies, money is flooding into anything with AI in the pitch deck, and governments are rushing to build their own AI supply ￰5￱ stock market has responded like it always does when people think they’re about to get rich, by going ￰6￱ Nasdaq Composite is now up over 27% in the past year, with tech names ￰7￱ includes companies building AI and those just claiming to be part of the ￰8￱ frenzy has triggered fears that this might be the dot-com bubble all over again.

Big-name investors are ￰9￱ say we’re already in the middle of a ￰10￱ compares past bubbles to AI-driven stock rally In its note, Goldman’s strategists explained how bubbles usually form. There’s some big innovation, then a mad rush of investor money, new companies pop up, prices spike, and suddenly you’re knee-deep in systemic ￰11￱ said what’s happening now has “elements” that sound familiar, like super-high valuations, huge market concentration, companies spending more to stay on top, and vendor financing sneaking ￰12￱ they argued this still isn’t the same thing. “There are elements of investor behavior and market pricing currently that rhyme with previous bubbles,” the team wrote.

“However, we see key differences.” According to them, today’s rally is driven by real earnings and growth, not wild ￰13￱ companies leading this (you know, Meta , Microsoft, Google, and Nvidia ) all have solid balance sheets. That’s a key reason Goldman isn’t throwing the word “bubble” ￰14￱ backed this with ￰15￱ said the combined value of the so-called Magnificent 7 in 2025, based on price-to-earnings ratios, is just a little over half of what the tech sector was worth during the 2000 peak. “Valuations of the technology sector are becoming stretched,” they wrote, “but not yet at levels consistent with historical bubbles.” But even with all this talk of calm, Goldman still told investors to chill out and diversify.

“There are good reasons to diversify portfolio exposures to offset the concentration effect,” the note said, though it didn’t go as far as calling the current situation ￰16￱ Solomon and Paul Tudor Jones issue blunt warnings Despite Goldman’s measured tone, its CEO David Solomon made it clear things might not stay ￰17￱ Italian Tech Week in Turin, he said the stock market is overdue for a correction. “Markets run in cycles,” David said. “Whenever we’ve historically had a significant acceleration in a new technology that creates a lot of capital formation… you generally see the market run ahead of the ￰18￱ are going to be winners and losers.” Meanwhile, Paul Tudor Jones, the billionaire hedge fund boss, didn’t hold back ￰19￱ CNBC’s Squawk Box, Paul said he’s expecting a final surge before the music stops.

“My guess is that I think all the ingredients are in place for some kind of a blow off,” he said . “History rhymes a lot, so I would think some version of it is going to happen ￰20￱ anything, now is so much more potentially explosive than 1999.” That kind of talk has some investors running straight to “safe havens.” On Tuesday, gold hit $4,100 an ounce for the first time ever, as fears of a bubble pushed people to hedge their ￰21￱ ￰22￱ OG crypto Bitcoin is also getting some of that love, as it smashed $127,000 just a few days ￰23￱ you're reading this, you’re already ￰24￱ there with our newsletter .