Here’s a statement that will either age like fine wine or like milk left on a summer porch: the chief investment officer of one of Europe’s largest asset managers says the AI trade is not a bubble.
Johanna Kyrklund, Group CIO at Schroders, has laid out a case that today’s tech and AI valuations, while admittedly frothy, lack the defining characteristics of a true speculative mania. The core argument is straightforward. Unlike the dot-com era, the companies at the center of the AI boom are actually making money.
Cash flows make the difference
But Kyrklund’s analysis points to a fundamental distinction. The major tech firms driving AI spending today, think Meta and Google, are funding their enormous capital expenditures through robust operating cash flows, not through venture capital fairy dust and creative accounting.
Both Meta and Google have already begun reporting early revenue gains directly tied to AI features baked into their products. That’s a crucial difference from 1999, when companies with zero revenue and a website were commanding billion-dollar valuations because they had “.com” in the name.
