Remember when your friend threw that house party that started with just a few people and somehow turned into the entire neighborhood showing up? That’s basically what’s happening with AI stocks right now, and some folks are starting to wonder if maybe we should call it a night before someone breaks something expensive.
Yesterday, the markets took a breather from their relentless “AI everything!” rally, with all the major indexes closing in the red. It’s like everyone suddenly realized they’ve been dancing on the tables for months and maybe it’s time to check if the floor can actually hold all this weight.
Here’s the thing that’s got people nervous: According to Morgan Stanley (and these guys count everything twice), the Magnificent 7 stocks plus about three dozen AI data center companies are responsible for 75% of the S&P 500’s gains since ChatGPT crashed the party in November 2022. That’s not a broad-based rally – that’s more like a very exclusive VIP section while everyone else is stuck at the bar.
Even Nvidia’s CEO Jensen Huang is out there saying “this isn’t a bubble, guys!” which, let’s be honest, is exactly what someone would say if they were worried it might be a bubble. It’s like when your friend insists they’re “totally fine to drive” after their fifth drink.
Meanwhile, the smart money is quietly backing away from the punch bowl. Gold and silver just hit record highs above $4,000 and $50 per ounce respectively, Bitcoin briefly touched $125,000, and everyone’s suddenly very interested in “safe haven assets.” Translation: People are hedging their bets because they’ve seen this movie before, and it doesn’t always end well.
The pre-market action shows some interesting moves: Intel’s up 1.7% on their new 18A PC chip launch (because apparently we need even more AI processing power), while Qualcomm is giving back some gains after yesterday’s OpenAI partnership announcement. It’s like the market is playing hot potato with AI stocks.
What’s really keeping people up at night is how concentrated this whole thing has become. When 75% of your gains come from a handful of companies all betting on the same trend, you’re basically putting all your eggs in one very expensive, AI-powered basket. One bad earnings report, one regulatory hiccup, or one “actually, maybe AI isn’t going to solve world hunger” moment, and things could get ugly fast.
The Fed’s probably watching all this with the same expression your parents had when they came home to find that house party in full swing. They’re likely to keep cutting rates (betting markets say another 0.25% drop is coming), but they’re also probably wondering if they should start turning the lights on and telling everyone to go home.
Look, AI is genuinely revolutionary stuff. But so was the internet in 1999, and we all remember how that particular party ended. The technology was real, the potential was massive, but the valuations got a little… creative. Right now, we’re in that phase where everyone’s having a great time, but the responsible adults in the room are starting to eye the exits.
Just saying – maybe keep some cash handy for when the music stops.