Morningstar’s chief US market strategist says he is beginning to see signs of the 1990s tech bubble appearing as established companies pivot to AI brands.
“There’s the old saying that history may not necessarily repeat itself, but it sure does rhyme – and I’m starting to see some echoes of the 1990s tech bubble,” Dave Sekera said in a note to investors.
Sekera’s concerns stem from non-AI companies re-inventing themselves, such as the New Zealand-founded footwear company ‘Allbirds’ (NASDAQ:BIRD) that recently “sold its sole” to artificial intelligence.
“A company called Allbirds that used to make shoes sold their shoe business and announced last week that they’re going to use those proceeds to go buy AI GPUs and turn themselves into a data centre. What does a shoe company know about being a data centre?,” Sekera questioned.
“I don’t know, but the stock skyrocketed. It went from about US$2.50 a share to over US$20 a share before starting to retreat.”
Another example, he says, is ‘Myseum’, which announced its rebranding from a social media company to Myseum.AI on 15 April.
“That really reminds me of the tech bubble; back then, a whole host of companies added .com to their name and called themselves an internet business and the stock would pop. Again, certainly not trying to call that we’re in a bubble right now or that we’re on the top of the AI tech cycle at this point, but I’m starting to see some interesting anecdotes out there – and my guess is we see more of them in the coming months.”
It comes after JP Morgan raised its S&P 500 target to 7,600 from 7,200, citing strong AI-driven earnings growth and a “blue sky” scenario of 8000 if geopolitical tensions ease. Analysts are predicting a robust first half of 2026 before a potential growth moderation, emphasising cyclical sectors, value shares, and international equities.
But, Sekera believes investors have become too complacent too fast.
“Having said that, I still think we’re in the stage of a market rally where investors want to let the growth part of their barbell-shaped portfolio continue to work and keep running to the upside. But I do think we’re going to still see a lot more volatility over the course of 2026.”
With high oil prices set to boost inflation for the next few months, lowering economic growth, Sekera says it’s difficult to tell the extent of some of the production and supply shutdowns in Asia and Europe.
“That’ll have to work its way through [the US] economy and the global economy. With high gas prices at the pump, we have to see how consumers are going to react and how much they might pull in the reins in the short term.”
He predicts trade and tariff negotiations, which have been overshadowed by the conflict, will likely start back up and hit headlines by July.
“I think the Fed will be on hold for the foreseeable future. Interest rates have been in a trading range; we originally had expected interest rates to fall over the course of the year and they’re not necessarily falling like we had anticipated. With inflation staying higher, it might be a while before rates start coming down.”
Meanwhile, Sekera says weakening fundamentals in the private credit market are yet to play through the market.
“Looking at China, I think the economy there is probably weaker than expected. Lastly, I’m still keeping my eye on Japanese government bonds and the Japanese yen. If those keep weakening at the pace that they have been weakening, you could see an unwinding of the carry trade.”
