The 400-Year Bubble Study: Inside Coatue’s AI Report

18 charts that explain why the $54B hedge fund still believes AI is early, not overvalued

Coatue just published one of the most talked-about reports in tech and finance this year.
After studying 30 bubbles over 400 years, Philippe Laffont’s $54B hedge fund concluded that AI isn’t a bubble, but an early industrial revolution.

Below are 18 key slides that capture their full argument. Each one reveals a different angle on how AI is reshaping markets, productivity, and investment logic:

1. AI continues to drive markets higher

AI stocks have outperformed the S&P 500 by more than 160% since ChatGPT’s launch.
Coatue calls this “the AI premium” — still justified by fundamentals.

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2. New AI leadership is emerging

Energy, semiconductors, and cloud infrastructure are leading the returns.
“AI power” has replaced “AI software” as the market’s growth engine.

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3. Inflation expectations are moderating

Coatue believes the macro backdrop remains supportive.
Inflation expectations for 2025 have stabilized near 3%, easing pressure on rates.

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4. Tech vs non-tech: valuation spread is rational

The gap between tech and non-tech P/E multiples is wide, but within historical norms.
Unlike 1999, tech’s profits justify the premium.

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5. Media says “AI is a bubble” — Coatue disagrees

Headlines warn of hype.
Coatue’s view: adoption is real, ROI is measurable, and corporate demand is accelerating.

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6. What a bubble actually looks like

Displacement → Boom → Euphoria → Profit taking → Panic → Crash.
Coatue’s takeaway: AI is still in the displacement phase — not euphoria.

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7. Are AI leaders too big?

The top 10 U.S. companies now represent 77% of GDP — up from 34% during the dot-com era.
But these giants are profitable, global, and diversified.

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8. AI adoption is slowing slightly

Corporate AI adoption rose fast, from 5% to 13% of employees.
Coatue notes a short-term plateau before the next wave of enterprise integration.

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9. Vendor financing: the “infinite money loop”

OpenAI, Nvidia, Oracle, Intel, and AMD are creating a circular economy of investment and spending.
Coatue calls it “the infinite money glitch” — sustainable only if ROI keeps improving.

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10. Not all long-term cycles are bubbles

Many “bubbles” (like the internet, electricity, or cloud) became permanent infrastructure.
AI, they argue, fits that pattern.

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11. AI is early — but adoption is massive

Compared to PCs and the internet, AI reached similar penetration in a fraction of the time.
Coatue says the adoption curve is still steep.

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12. Market concentration isn’t a red flag

High concentration often signals maturity, not fragility.
AI’s largest players have strong balance sheets and multiple revenue lines.

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13. Multiples expanded, but far below dot-com levels

The Nasdaq’s P/E peaked near 90x in 2000.
Today’s multiple: roughly 28x — high, but grounded in earnings.

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14. 1999 vs 2025: valuations are healthier

In 1999, the top seven tech firms averaged a 67x multiple.
In 2025, it’s closer to 28x — with stronger balance sheets and cash flow.

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15. Profits justify the investment

By 2035, AI-driven industries could generate $1.9 trillion in annual revenue and 20% ROIC.
Coatue expects margins to compound as adoption scales.

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16. IPO activity is muted

Equity issuance is low compared to past bubbles.
The .com boom saw 500+ IPOs a year; today, fewer than 60.

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17. Leverage is creeping back

Retail investors are borrowing again, similar to post-COVID levels.
Coatue flags this as one of the few genuine risks in the system.

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18. The two futures of AI

• AI Abundance (probability >66%): Productivity accelerates, inflation stays low, tech keeps leading.

• AI Reckoning (<33%): Bubble pops, recession follows, credit stress rises.

Coatue is betting on the first.

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10 Takeaways and Full Report (59 pages):

Here are the core lessons: