Market Valuation

If you’ve been following our blogs and Montgomery Minutes about noted short seller Michael Burry, you’ll know he’s been making headlines this year for shorting the artificial intelligence (AI) bubble. Late last week, he reported he has again increased those short bets.

If you haven’t been following our posts on the subject, Michael Burry is the former chief of the now-closed hedge fund manager Scion Asset Management and was immortalised by Michael Lewis in his 2010 book The Big Short: Inside the Doomsday Machine, which reported on Burry’s large asymmetric bets against the 2008 U.S. housing bubble. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Insightful Insights, Market commentary, Market Valuation, Technology & Telecommunications.

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Artificial intelligence (AI) has become the market’s biggest investment theme, with strong earnings and seemingly reasonable valuations convincing many investors the rally still has further to run.

But beneath the surface, several warning signs suggest the picture may not be as strong as it appears.

Big claims, bigger questions

Elon Musk says SpaceX’s Total Addressable Market (TAM) in Enterprise AI is US$26.5 trillion. Outside estimates suggest $US50-$300 billion. This leaves the ‘buyers’ and the ‘sellers’ with some important questions. continue…

by Roger Montgomery Posted in Companies, Market Valuation.

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According to the most bullish investors the current bull market bears little resemblance to the tech bubble of 1999/2000.

That late-90s tech bubble was fueled by a Fear of Missing Out (FOMO), which was reflected in the very high price-to-earnings (P/E) multiples. Today’s bull market is accompanied by much more reasonable valuations suggesting that the rally is merely reflecting an equally steep increase in real earnings.

In early 2000, the tech sector’s forward P/E ratio stood at 55 times, and the broader S&P500 rose to 25 times forward earnings; today, the S&P500 sits on a forward P/E of 20.5 times and the tech sector on 23 times.

The bulls suggest an earnings-driven rally (as reflected in modest P/E ratios) is inherently more sustainable than one built on expanding hope and P/Es. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Insightful Insights, Market commentary, Market Valuation.

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I wonder whether there’s a more fundamental reason for SpaceX crashing 16 per cent overnight and 30 per cent since its June 16 high of US$225.64, beyond the headlines.

SpaceX (NASDAQ:SPCX) shares plunged roughly 16 per cent overnight after disclosing a massive US$20 billion bond offering to fund its artificial intelligence (AI) ambitions, amid growing dilution concerns stemming from a US$60 billion stock acquisition of the AI coding platform Cursor.

SpaceX has disclosed plans to sell US$20 billion in investment-grade senior unsecured bonds to repay bridge financing and fund its aggressive artificial intelligence ambitions.

Meanwhile, the company’s agreement to acquire Anysphere (the developer of the Cursor AI coding platform) for US$60 billion in stock will dilute existing stakes. continue…

by Roger Montgomery Posted in Companies, Market commentary, Market Valuation.

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In my latest article for The Australian, I argue that the extraordinary enthusiasm surrounding SpaceX’s Initial Public Offering (IPO) may be a warning sign that markets are entering a late-stage speculative phase. Drawing parallels with major thematic IPOs that preceded previous market peaks, I examine how Fear of Missing Out (FOMO), passive investment flows, Artificial Intelligence (AI)-driven optimism and a growing disconnect between valuations and fundamentals are creating conditions that resemble past market bubbles. The key question for investors is whether today’s market is being driven by sustainable earnings growth or by speculation that could ultimately prove unsustainable.

Download the article here: Gravity-defying SpaceX IPO flags warning of market crash landing

by Roger Montgomery Posted in Companies, In the Press, Market commentary, Market Valuation.

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SpaceX has some real businesses, but if I am completely lucid, I’d say there’s no business that would support its US$2 trillion valuation.

While the headlines are made by rockets and SpaceX’s reusable Falcon 9, which has radically changed the economics of sending cargo into orbit, slashing launch costs by 85 per cent to roughly US$2,700 per kilogram, it is Starlink that generated US$11 billion of last year’s US$18 billion in revenue. 

In fact, sending rockets into space doesn’t do a lot for the company’s finances. Indeed, SpaceX generates more revenue from renting out its NVIDIA chips to Anthropic than it does from rockets. continue…

by Roger Montgomery Posted in Companies, Market commentary, Market Valuation, Technology & Telecommunications.

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I joined Kylie Morris on ABC Newcastle Mornings today to discuss the extraordinary rise of SpaceX following its record Initial Public Offering (IPO). We explored why the company’s valuation appears disconnected from traditional measures of value, how NASDAQ’s fast-tracked index inclusion could force ETFs and superannuation funds to buy shares, and why investors should be mindful of the risks that can emerge when market hype and scarcity drive prices higher.

Listen from 37:04: ABC Newcastle Mornings continue…

by Roger Montgomery Posted in Companies, Global markets, Market Valuation, Radio.

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A peace deal between Iran and the United States has transformed the outlook for global markets – at least for now.

I joined Sean Aylmer from Fear and Greed, to discuss which sectors stand to benefit most from falling oil prices, why airlines, retailers and property stocks could outperform, and why history suggests investors should be cautious despite the optimism.

I also touch on the extraordinary valuation of SpaceX, why Elon Musk may be the greatest marketer the world has ever seen, and the surprising role Google may have played ahead of the company’s IPO.

Listen here: 

by Roger Montgomery Posted in Global markets, Insightful Insights, Market Valuation, Podcast Channel.

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Bullish investors believe AI is a new, infinite fourth factor of a nation’s production and wealth creation. In the past, we had labour, capital and land as production inputs, all of which were, of course, finite. Land provided the raw materials, labour the muscle and the mind to transform them, and capital was the tool.

Enter AI. The transformative aspect of this fourth ingredient is that, unlike the physical limitations of land or the finite hours of the human workforce, data is a resource that is functionally unlimited. And, importantly, it’s the only factor of production that actually grows more abundant the more we use it.

This article was first published in The Australian on 27 May 2026.

by Roger Montgomery Posted in Editor's Pick, Global markets, In the Press, Insightful Insights, Investing Education, Market commentary, Market Valuation, Popular, Technology & Telecommunications.

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I joined Juliette Saly on Ausbiz today to discuss why global equity markets may be closer to a peak than many investors expect. We explored the historical link between oil-price spikes and weaker share markets, why even strong artificial intelligence (AI) –driven earnings growth may not protect valuations in a higher-rate environment, and how the excitement surrounding SpaceX is pushing many listed “proxy” space stocks into hyper-exponential territory untethered from fundamentals.

You can watch via Ausbiz here: Global equities may be closer to a peak than many investors expect

by Roger Montgomery Posted in Investing Education, Market commentary, Market Valuation, Technology & Telecommunications, TV Appearances.

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