This is a great, well-written piece, worth reading in its entirety. Here are a few passages that will be of interest to the HN community:

...Let’s begin by offering a definition of the word “bubble.” We all hear the word thrown around carelessly and often, but it lacks a formal definition. Let’s try. Ockham’s Razor guides us: Keep it simple. We define a bubble as a circumstance in which asset prices 1) offer little chance of any positive risk premium relative to bonds or cash, using any reasonable projection of expected cash flows, and 2) are sustained because investors believe they can sell the asset to someone else for a higher price tomorrow, with little regard for the underlying fundamentals.

At the beginning of 2000, the 10 largest market-cap tech stocks in the United States, collectively representing a 25% share of the S&P 500 Index—Microsoft, Cisco, Intel, IBM, AOL, Oracle, Dell, Sun, Qualcomm, and HP—did not live up to the excessively optimistic expectations. Over the next 18 years, not a single one beat the market: five produced positive returns, averaging 3.2% a year compounded, far lower than the market return, and two failed outright. Of the five that produced negative returns, the average outcome was a loss of 7.2% a year, or 12.6% a year less than the S&P 500.

Reasonable observers can disagree, but we believe we are experiencing a tech bubble, based on our relatively rigorous definition of the term. At the end of January 2018, the seven largest-cap stocks in the world were all tech fliers: Alphabet, Apple, Microsoft, Facebook, Amazon, Tencent, and Alibaba. Never before has any sector so dominated the global roster of largest market-cap companies. At the peak of the tech boom, four of the top seven companies by market cap were in the tech sector, and at the peak of the oil bubble, five of the top seven were in the energy sector. Only the Japanese stock market’s bubble at yearend 1989 has matched today’s tech sector dominance of the global market-capitalization league tables.9 Not only do we have the FANGs, we have FANG+ futures, affording investors a chance to buy the world’s trendiest tech stocks with almost no collateral, and the list is amended quarterly to make sure only the trendiest are on the list.

Can all of the seven tech highfliers [Alphabet, Apple, Microsoft, Facebook, Amazon, Tencent, and Alibaba] collectively succeed to sufficiently justify their $4.3 trillion combined market capitalization at yearend 2017? Nothing is impossible, but this outcome is implausible. Sure, some of the new tech giants are at valuation multiples that are not extravagant, but several sport startling multiples—and all trade at levels that require robust continued growth. These companies are at war—in some cases directly with one another—for market share, competing for the same eyeballs, and are facing a growing risk of regulatory constraints.

Our purpose in this article is not to prove that current conditions represent a bubble. Reasonable people may reach the opposite conclusion. After all, some level of cash flow expectations can justify any price. It’s a matter of subjective judgment as to whether such lofty cash flow expectations are sensible, implausible, or preposterous. Considering all the caveats required to support current prices, we think tech stocks are at the implausible stage in their collective market value, with some individual stocks (and most cryptocurrencies) at the preposterous level. We believe tech stocks are in another bubble, with the potential to impact investable asset classes far beyond the tech sector, albeit not as extreme as the 1999–2000 bubble, labeled by many “the mother of all bubbles.”

Highly recommended if you're interested in the subject.