Researchers at the European Central Bank published a blog post on August 17 warning that a stock market correction is likely coming. They believe the AI-fueled rally in technology stocks presents troubling parallels with the late 1990s internet bubble. Euro-area households hold approximately 440 billion euros in exposure to the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla), primarily through funds and ETFs, creating contagion risk as redemptions can amplify price declines. The researchers also note that central banks today have less room to maneuver than during the dot-com bubble burst to cushion a potential shock.
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