KB Securities analyst Euntaek Lee has drawn a direct comparison between today's market concentration around artificial intelligence-related stocks and the late stages of the dot-com boom. In a client note, Lee argued that current market dynamics are "largely the same" as those witnessed in 1999, when investor attention centered on internet-linked names while other sectors lagged despite strong fundamentals.
Lee highlighted that, in 2025, sectors such as financials and healthcare advanced on robust earnings catalysts but "have been left out of the rally simply because they are not AI plays." That exclusion, he said, mirrors the way non-internet sectors were overlooked at the end of the last major tech-driven surge.
The KB Securities note also pointed to a behavioral parallel on the buy side. During the dot-com era, mere association with the internet could lift a stock sharply regardless of earnings. Today, KB Securities identifies a similar dynamic, citing companies "skyrocketing on news of a visit by Jensen Huang, or a hint of forays into AI/robotics, despite the absence of related earnings."
Rather than framing the narrowing of market leadership solely as a warning sign, Lee urged investors to revisit prevailing interpretations. He wrote that "History shows that, in many cases, rising concentration indicates that the market still has momentum." At the same time, he acknowledged the converse risk, noting that "rally broadening is not necessarily healthy" and "may be a sign that the rally is approaching its end."
Market data in the note reflected near-term weakness in the major indexes, with the Nasdaq-related gauge showing a decline of -0.99% and a broad U.S. index down -1.21%. KB Securities expects leadership concentration to intensify further, characterizing that move as consistent with patterns observed in late-stage prior bubble rallies.
Context and implications
The observation from KB Securities focuses on how investor attention can become narrowly concentrated on a subset of companies tied to a dominant thematic trend. In this instance, artificial intelligence acts as the magnet, drawing flows and elevating valuations for names perceived to be beneficiaries of AI adoption. Meanwhile, sectors that have produced tangible earnings strength have not participated to the same degree if they lack an AI link.
Lee's note stops short of declaring an imminent market reversal, instead offering a dual reading: concentration can indicate ongoing momentum, but changes in breadth can presage an end to a rally. The firm explicitly anticipates that concentration among market leaders will become more pronounced.
What to watch
- Whether earnings-driven sectors such as financials and healthcare begin to rejoin the rally or remain sidelined.
- The degree to which AI-related narratives continue to lift valuations without corresponding earnings support.
- Market breadth indicators and whether broadening of the rally emerges, which KB Securities flags as potentially signaling a turning point.