S&P 500 P/E is 30 and historically used to be much lower. Some of it can be surely attributed to increasing inequality and increased wealth of the hyperwealthy who have no other option than to store their money in stocks absent a hypergrowth market, even at lower expected profit. But "growth" can only so long serve as an argument to justify a 40-50 P/E vs. a 25-30 as in other parts of the stock market. If that growth stalls, there is a lot of room to fall, even if the companies will still be profitable and won't go under. Ed at no point claims that Nvidia, Microsoft or Google would cease to exist as companies, as they can of course be very profitable in smaller markets than those that are currently being priced in and without AI contributing to revenue. But companies that purely rely on AI for revenue will have a hard time to ever turn a profit and there is not a single example to proof otherwise. And if that happens, you might also see -20%, -30% or more on some of these larger players that will survive.
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