Arindam Mandal from Marcellus Investment Managers warns of potential correction in the US stock market, citing bubble-like behavior in parts of the AI ecosystem. According to Mint, Mandal notes that while the US market is at record highs, it has diverged from being a proxy for the economy, with consumer sentiment weak due to inflation concerns but actual spending holding up reasonably well. The expert emphasizes that the S&P 500 is dominated by large global companies, especially AI and technology-linked names, where earnings momentum remains strong, creating a contrast with cautious consumer behavior. Mandal warns that parts of the AI ecosystem are clearly showing bubble-like behavior when semiconductor proxies and unprofitable technology move 20-30% in a month, suggesting expectations have moved ahead of what even good outcomes can justify.
India's exclusion from the current AI boom presents both advantages and disadvantages, according to analysis from Business Standard. While India's businesses and stock markets remain outside the current AI frenzy, the country faces potential downsides including being overtaken by South Korea and Taiwan in market capitalization rankings. The analysis notes that India's ranking has dropped to No 7 globally, with current profits of just two South Korean companies (Samsung and SK Hynix) exceeding those of all listed Indian companies combined. As per Mint, Mandal suggests that the index is vulnerable because current profit growth is concentrated in a handful of very profitable AI and tech companies, creating a narrow set of winners while many non-tech businesses with strong franchises are trading at more reasonable valuations.
The current market valuations reflect significant global imbalances, as reported by Business Standard. The world's 14 trillion-dollar companies are valued at $35 trillion, while America's GDP stands at $32 trillion. This disparity is driven by the AI frenzy, with 12 of the 14 trillion-dollar companies being tech firms. The analysis warns that this concentration creates vulnerability, suggesting that even the US economy may not be large enough to support such massive company valuations when markets are experiencing speculative bubbles. According to Mint, Mandal notes that the US macro setup is resilient but complicated, with growth holding up better than expected and real wages still positive, though inflation remains sticky which makes the Fed's job difficult.
The current AI boom shares characteristics with historical speculative bubbles including Tulip Mania, the South Sea Bubble, and the dotcom boom, according to the analysis. SpaceX's IPO is currently underway with a potential valuation of $1.77 trillion, which could make Elon Musk the world's first trillionaire. However, valuation expert Aswath Damodaran suggests SpaceX should be valued around $1.2 trillion, indicating potential downside when market corrections occur. The analysis warns of up to a decade of market weakness that could affect both stock market wealth and real businesses. As per Mint, Mandal agrees that it is not a clean 2000-style bubble because many of today's leaders have real earnings, cash flows and balance sheets, but emphasizes that the risk is that expectations and valuations might have moved ahead of what even a good outcome can justify.
India's AI stocks are experiencing their biggest test as global bubble concerns intensify, with companies linked to data centers and high-performance computing seeing significant gains. Netweb Technologies has gained more than 140% over the past year as demand for AI servers accelerated, while Anant Raj has more than doubled over two years on data center demand expectations. E2E Networks has nearly tripled during the same period, and HFCL Limited and Sterlite Technologies have emerged among the biggest winners of 2026, with gains of about 120% and 350% respectively. According to a KPMG report, India's data centre industry could generate nearly $45.7 billion in revenue by 2033 as AI adoption drives capacity additions. As per Mint, Mandal suggests that value is better in high-quality industrials, aerospace, select financials, healthcare distribution, exchanges, infrastructure and other non-tech compounders where earnings are still growing but valuations have not expanded.
Market experts are increasingly questioning whether earnings can justify current AI valuations, with concerns growing about excessive concentration in AI-linked names. Vinod Nair from Geojit Investments warns that investors are questioning the lack of measurable return on investment from enterprise AI deployments, noting that any recalibration of global AI capital expenditure could trigger corrections across infrastructure beneficiaries. Gurmeet Singh Chawla from Master Portfolio Services emphasizes that many Indian AI stocks have become proxies for global AI sentiment rather than being valued on their own earnings potential. According to Mint, Mandal recommends selectively focusing on high-quality, non-tech companies with predictable cash flows as consumers remain cautious amidst inflation pressures. He notes that the opportunity lies in businesses with predictable cash flows, pricing power and long runway growth, not in low-quality cyclicals just because they are cheap, emphasizing that even if broader markets correct, quality businesses may recover faster when panic passes.
