Analyst draws dot-com parallels as AI trade narrows market leadership

Investing.com -- Narrowing market leadership around artificial intelligence stocks echoes the late stage of the dot-com bubble, and may actually signal continued momentum rather than imminent danger, according to KB Securities.

Analyst Euntaek Lee argued in a note to clients that current market dynamics are "largely the same" as those seen in 1999, when dot-com stocks became the sole focus of investors while sectors posting strong earnings, including healthcare and financials, were left behind.

Lee drew a direct parallel to today, noting that financials and healthcare rallied in 2025 on strong earnings catalysts but "have been left out of the rally simply because they are not AI plays."

The pattern on the other side of the ledger is equally familiar, Lee said. During the dot-com era, the mere announcement of internet-related business plans was sufficient to send stocks surging regardless of fundamentals.

KB Securities identified the same dynamic today, pointing to stocks "skyrocketing on news of a visit by Jensen Huang, or a hint of forays into AI/robotics, despite the absence of related earnings."

Rather than treating the narrowing as a warning sign, Lee urged investors to reconsider the conventional view.

"History shows that, in many cases, rising concentration indicates that the market still has momentum," he wrote.

However, he acknowledged that the "rally broadening is not necessarily healthy" and "may be a sign that the rally is approaching its end."

KB Securities expects leadership concentration to intensify further, consistent with historical patterns observed in the late stages of prior bubble rallies.

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