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Macro Notes - Key Differences Between Now and the 2000 Tech Bubble

October 21, 2025
Bipan Rai headshot

Bipan Rai

Managing Director, Head of ETF & Alternatives Strategy

Both of the below charts make important comparisons between the top US tech firms on the eve of the ​“Tech bubble” in March 2000 and the Mag 7 firms of today.

Chart 1 shows the market-cap weighted free cash flow for both. This gives us a sense for what portion of capital expenditures are funded from operating cash flows versus external financing (debt or equity). The large blue bar for today relative to the ​‘Tech Bubble’ tells us that current levels of AI-related capex are being funded endogenously. 

This is a good thing - as the current AI spending boom isn’t leveraged.

Chart 2 shows the market-cap weighted Capex/​EBITDA ratio for both. This gives us an idea for how much of a firm’s earnings are reinvested back into capital assets – including AI. Here we see that the difference between the two isn’t as stark as we’d like.

In other words – as commitments to AI-related capex continue to rise, it’s more likely that firms will turn to external financing.

We’re still leaning into the AI capex story with an eye on mid-2026 as a potential inflection point.

Chart 1 – Free Cash Flow for Top US Tech Firms: Now vs. 2000 Tech Bubble
*Market cap weighted
Source: BMO GAM, Bloomberg
Chart 2 – Capex/​EBITDA for Top US Tech Firms: Now vs. 2000 Tech Bubble
*Market cap weighted
Source: BMO GAM, Bloomberg

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