AI Valuation Concerns

As an investor, should you be more concerned about the value of your groceries or artificial intelligence?

It may seem like a silly question, but there’s a serious answer. 

One way to measure a stock’s valuation is by looking at what’s called the price-to-earnings ratio, which is calculated by dividing the current share price by the company’s earnings per share. A high P/E can suggest investors are willing to pay a higher price for future earnings. A lower P/E shows the opposite.

One well-known, membership-only warehouse club has a P/E ratio of 46. Meanwhile, the leading maker of AI semiconductor chips, which spells its name kinda funny, has a P/E of 28.

So you might ask yourself, “Is discounted chicken going to change the world, or are semiconductors that can perform calculations at up to several petaFLOPS?”

Some naysayers have also drawn comparisons between today’s AI revolution and the dot-com era of the early 2000s. 

But that, too, seems a bit far-fetched.

Back then, Barron’s magazine cover story in March 2000, called “Burning Up,” reported that 74 percent of 207 publicly traded internet companies had “negative cash flows” and at least 51 of those companies were projected to run out of money in the next 12 months.

Today, the largest parts of the AI market are producing quarterly results that differ significantly from what occurred during the dot-com cycle.

So what does it all mean?

If you’re seeing unsettling headlines, please reach out. When we created your investment strategy, we aligned your goals and time horizon with your risk tolerance. But if the AI cycle has you on edge, it might be best to talk about what’s going on.

^{Finance.Yahoo.com, November 14, 2025, “NVIDIA Corporation (NVDA)”}

^{Finance.Yahoo.com, November 14, 2025, “Costco Wholesale Corporation (COST)”}

^{Barrons.com, March 20, 2000, “Burning Up”}

^{FactSet.com, November 14, 2025. "Earnings Insight"} 

^{McKinsey.com, 2025, “The state of AI in 2025: Agents, innovation, and transformation”}