Image source: Getty Images <\/p>\n
Recently, there\u2019s been quite a bit of talk about a potential stock market crash. It seems a lot of people believe today\u2019s market conditions closely resemble those of the late 1990s (the dotcom boom), which ended in tears.<\/p>\n
Should we be worried about a crash? Here\u2019s my take.<\/p>\n
There are a few things I want to address here. First, let\u2019s talk about artificial intelligence (AI) \u2013 is it a bubble (where valuations are completely detached from reality) and a repeat of the late 1990s?<\/p>\n
I don\u2019t think so. The reason why is that the companies spearheading this technology revolution \u2013 like Microsoft, Alphabet, and Amazon \u2013 have extremely strong, diversified business models, tons of cash flow, and fortress balance sheets.<\/p>\n
Meanwhile, their valuations aren\u2019t crazy. Alphabet, for example, currently sports a price-to-earnings (P\/E) ratio of around 25.<\/p>\n
Having said all that, tech stocks are known for having sharp pullbacks at times. It happened in 2018, 2022, and early 2025, so we can\u2019t rule out another one.<\/p>\n
Now, while I don\u2019t see AI as a bubble, I do believe there are bubbles in other areas of the market. Quantum computing\u2019s a good example.<\/p>\n
Take the stock Quantum Computing (NASDAQ: QUBT) for instance (the fact its name is the same as its industry is a major red flag, if you ask me).<\/p>\n
Currently, this company has a market-cap of around $4bn. Yet sales for this year are only expected to be around $440,000.<\/p>\n
So we\u2019re looking at a price-to-sales ratio of about 9,100. I reckon that valuation\u2019s detached from the fundamentals.<\/p>\n
To put that in perspective, AI company Palantir, which has been called one of the most overvalued companies in history, has a price-to-sales ratio of about 100.<\/p>\n
Of course, quantum computing (the industry) has lots of potential. I just think the stocks in it have gott way ahead of themselves. And therefore I wouldn\u2019t be surprised to see a meltdown in this area of the market at some point.<\/p>\n
Zooming out and looking at the broader market though, I reckon the backdrop for stocks looks okay.<\/p>\n
In the US, interest rates are coming down and this should be supportive for businesses. Note that stocks have historically done well as rates have come down.<\/p>\n
Meanwhile, US corporate earnings are rising. For Q4 2025 through Q2 2026, analysts are calling for earnings growth rates of 7.3%, 11.8%, and 12.7% respectively, according to FactSet.<\/p>\n
Turning to the UK market, many stocks still look attractively valued. Within the FTSE 100, there are many companies with P\/E ratios of less than 15.<\/p>\n
As for UK small-caps, many of these stocks continue to trade at bargain valuations. There\u2019s definitely no bubble here.<\/p>\n
One other thing worth mentioning in relation to stock market crashes is that we\u2019ve already had one in 2025 (in April). Two in a year is basically unheard of.<\/p>\n
So the way I see it is that investors owning a solid, well-diversified portfolio probably don\u2019t need to be too concerned about a stock market crash. Those invested in a range of high-quality companies trading at reasonable valuations, and minimising exposure to areas of the market that look outrageously expensive, I think should be fine in the long run.<\/p>\n
The post Should we be worried about a stock market crash?<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/p>\n Edward Sheldon has positions in Alphabet, Amazon, and Microsoft. The Motley Fool UK has recommended Alphabet, Amazon, and Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2025<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Recently, there\u2019s been quite a bit of talk about a potential stock market crash.…\n","protected":false},"author":2,"featured_media":195148,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,85166,4342,4767,16344,56,54,55],"class_list":["post-195147","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-market-conditions","tag-quantum-computing","tag-stock-market","tag-stock-market-crash","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/195147","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=195147"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/195147\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/195148"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=195147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=195147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=195147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}