Analyst draws dot-com parallels to GOOGL’s 100-year bond

Investing.com — Evercore ISI stated in a note to clients that the surge in artificial intelligence investment continues to reshape market dynamics, with analyst Julian Emanuel warning that falling free cash flow at major hyperscalers has triggered the firm’s “first systemic ‘yellow flag.’”

Evercore ISI believes there are “no signs of an AI slowdown,” with capital expenditure at hyperscalers expected to reach $650 billion over the next 12 months.

Despite that warning signal, Evercore ISI stressed that “fundamentals, not sentiment, are still driving stocks,” contrasting the current environment with the “exuberant FOMO-driven 1990s Bubble.”

The firm noted that high-yield technology spreads have widened due to concerns about “AI Disruption,” while investment-grade spreads remain tight even after Google issued a 100-year bond.

Emanuel said that the century bond is a “watershed event,” drawing parallels to Motorola’s 1997 century bond, which was followed by “a 300%+ rally in the NDX to the Y2K peak.”

The comparison, Evercore ISI argued, highlights how major credit events can intersect with powerful structural themes.

The firm maintained that the structural bull market has further to run, projecting the S&P 500 to reach 7,750 by the end of 2026 as earnings growth drives performance.

According to Evercore ISI, recent market weakness offers opportunities to gain exposure to long-term AI beneficiaries, urging investors to buy “Enablers, Adopters and Adapters” across communication services, consumer discretionary and information technology.

Evercore ISI also said market breadth remains healthy, noting the advance-decline line has reached new highs.

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