Select Dividend '10 Surprises for 2026': #2 No AI Bubble

Underperformers may be quick to cry “AI bubble” when they missed the boat.

A record 75% of global large cap equity strategies trailed the MSCI ACWI (net) YTD through Oct-25. While cynical, we think that when a lot of managers aren't doing well, they look to blame somebody else, and in this case it's easy to blame an ‘AI bubble’. This analysis does not take styles into account, but the pattern remains, and we do think that a general underperformance contributes to bubble fears.

Source: eVestment. As of 10/31/25. Past performance is no guarantee of future results. An index is unmanaged and unavailable for direct investment.

Market pundits claim ‘bubble’ like clockwork when the indices hit new highs.

If you look back over the last decade, there were six points in time where you saw a massive spike in article count from the Doom complex containing the words ‘Market Bubble’, and in 5:6 times, the SPX was up for another 13% on average over the next 12 months. The 1:6 event from early 2022 occurred after the Fed caught the market flat-footed with a surprise interest rate hike. I.e., it had nothing to do with a ‘market bubble’, and everything to do with the Fed. Our view is that in 12 months when 2026 is under review, we’ll have read more articles with the word ‘inflation’, than ‘AI bubble’.

The bottom panel series in light blue is the daily count of articles compiled by Bloomberg using the <NT> function with its smart search for option for the term “market bubble”. Source: Bloomberg as of 10/12/25. Past performance is no guarantee of future results. An index is unmanaged and unavailable for direct investment.

We remain bullish on Artificial Intelligence and view it as the general-purpose technology of our era similar to the steam engine (1800s), electricity (late 1800s), and internet (1990s) revolutions. General purpose technologies are platforms for new innovations, are widely used throughout the economy and can improve over time.

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