Accessible version Global Equity Derivatives & Strategy Year Ahead 2026: The Bubble era AI already big bubble or nothing to see here? Both unlikely Some say clear bubble, others say nonsense. As we noted in Jun 2024 (see Vol suggests AI isn't a bubble…yet), a bubble may be hard to avoid as big tech leaps since 19th century led to big bubbles—and AI is government backed. Biggest IPO gains since 90s, record dip-buying, fear & vol show bubble's progression. Promise of a magical future just out of reach may ush ...

Core Insights - The S&P 500 Index has recently rebounded and is close to its all-time high, indicating a positive market sentiment [1] - The index experienced a rise for five consecutive days, suggesting a strong upward momentum [1] - The cooling fears of an AI bubble have contributed to this rebound, reflecting a shift in investor sentiment [1] - Additionally, the odds of a Federal Reserve interest rate hike have influenced market dynamics positively [1]

Core Viewpoint - Nvidia has shown significant long-term growth, with a 1,200% increase over the past five years, but has faced volatility in 2025 due to external factors like tariffs and concerns over an AI bubble [2][3]. Group 1: Nvidia's Market Position - Nvidia is a leader in designing high-performance graphics processing units (GPUs), essential for AI training and applications, having entered the market early and maintained a competitive edge through continuous innovation [4]. - The company has experienced explosive earnings growth, with annual revenue and profit increasing in double- and triple-digit percentages, surpassing analysts' expectations in recent quarters [5]. Group 2: External Challenges - Investor sentiment has been affected by concerns regarding tariffs, economic growth, and the valuation of AI stocks, which has led to fluctuations in Nvidia's stock price despite strong earnings reports [6]. Group 3: Future Outlook - Nvidia's CEO, Jensen Huang, predicts that AI infrastructure spending could reach between $3 trillion and $4 trillion by the end of the decade, indicating a substantial market opportunity [8]. - Major customers like Amazon and Microsoft have reported increasing demand and plans to expand capacity, suggesting a growing need for Nvidia's GPUs [9]. - With reasonable valuation at 38x forward earnings estimates, Nvidia is positioned to potentially return to investors' "buy list," making it a strong candidate for growth in 2026 [10].

Core Insights - Palantir's management is emphasizing that its AI platform is a viable solution for corporations and governments, not just a demonstration [1] - The company reported record revenue of $1.18 billion in Q3 2025, driven by significant growth in U.S. commercial activity and government contracts [4] - There is a divide among investors, with some bullish on Palantir's growth potential while others express concerns about an overheated AI market [2][3] Financial Performance - Palantir's U.S. commercial revenue doubled year-over-year, with contract values reaching an all-time high for contracts over $5 million and $10 million [9] - Profitability has improved alongside revenue growth, indicating operational leverage is becoming effective as deployments increase [5] - The company ended the quarter with strong cash flow and no immediate liquidity concerns, allowing for potential share buybacks and conservative stock-based compensation [6] Market Sentiment - Skeptics warn that the AI market may be experiencing a supply-driven cycle rather than sustainable demand, which could impact software pricing and ROI timelines for customers [7] - Notable investors, including Michael Burry, are publicly opposing Palantir, suggesting that the current environment may resemble past tech bubbles where strong companies faced significant valuation compression [8] Future Outlook - Management anticipates continued growth in quarterly sales and sustained GAAP operational profitability [6] - However, there are concerns that if business pilots do not become widespread, U.S. commercial growth may decline from its current triple-digit levels [10]

Crypto traders have long been fixated on how much Bitcoin it will take them to buy a Lamborghini. But after a woeful November for Bitcoin and other cryptocurrencies, an old joke has popped back up online: crypto bros lining up for jobs at McDonald’s. The McDonald’s memes have surfaced during other low periods for Bitcoin. In early 2022, Nayib Bukele—the president of El Salvador who made Bitcoin legal tender in his country—photoshopped himself wearing a McDonald’s uniform after the cryptocurrency dropped.  ...

A late November rally propelled stocks near record highs, with investor optimism over a potential Federal Reserve interest-rate cut in December helping reverse the effects of an earlier midmonth market slump. The S&P 500 rose 0.5% on Friday, pushing it near a record set in late October and helping the index eke out a 0.1% monthly gain. The Dow Jones Industrial Average advanced 0.6% on the day, finishing the month with a 0.3% gain. Most Read from The Wall Street Journal The tech-heavy Nasdaq, however, re ...

The Dow Jones Industrial Average (^DJI) concluded Friday's abbreviated trading session higher, up 289.30 (0.61%) points, closing at 47716.42. This marked the fifth consecutive day of gains for Wall Street, wrapping up a volatile month on an optimistic note. The primary catalyst driving the market was escalating hopes for a Federal Reserve interest rate cut next month, reinforced by recent comments from Fed officials and stronger-than-expected economic data. Traders are now pricing in a high probability of a ...

Core Viewpoint - GMO warns that the AI sector is exhibiting classic signs of an investment bubble, characterized by high valuations and rampant speculation [1][7] Group 1: AI Bubble Concerns - The firm has consistently cautioned about an AI bubble, reiterating its bearish stance as market exuberance grows [1] - Quantum computing stocks have surged by over 1200% in the past year, leading to valuations that make other stocks appear undervalued [2] - GMO's concerns are specifically focused on the AI trade, suggesting that there are still opportunities in other areas of the stock market [2] Group 2: Market Comparisons - The current market environment is compared to the dot-com bubble of 2000, which should provide some reassurance to investors [3] - Dynamic, valuation-driven asset allocation strategies have historically helped investors avoid significant losses during market bubbles [3] Group 3: Investment Opportunities - GMO identifies developed market value stocks and non-US small-cap value stocks, particularly in Japan, as attractive investment opportunities [4] - The firm emphasizes that investors can shift their portfolios away from AI stocks without sacrificing long-term expected returns [6]

Core Viewpoint - Nvidia has issued a seven-page rebuttal to counter accusations of accounting practices similar to those of Enron, defending its financial transparency and business integrity [1][3]. Group 1: Nvidia's Defense - The rebuttal addresses claims of hidden debt and inflated revenue through special purpose vehicles and vendor financing, which are reminiscent of past corporate scandals [1]. - Nvidia's response is a direct reaction to criticisms from Michael Burry, who has raised concerns about the company's revenue recognition and stock-based compensation practices [2][3]. Group 2: Michael Burry's Position - Burry does not label Nvidia as a fraud but compares it to Cisco Systems, suggesting it reflects the excesses of the current AI boom [4]. - He criticizes Nvidia's memo as "disingenuous," arguing that it fails to address his main points regarding stock-based compensation and chip depreciation [4]. Group 3: Historical Context - The comparison to Cisco highlights the potential risks of overvaluation in the tech sector, as Cisco's stock soared 3,800% from 1995 to 2000 before experiencing a significant decline [6][7]. - Cisco's experience serves as a cautionary tale about the consequences of overly optimistic demand forecasts and subsequent overcapacity in the market [7]. Group 4: Current Market Dynamics - Burry notes that major tech companies, referred to as the "Five Horsemen," are investing nearly $3 trillion over three years in AI data centers, significantly increasing demand for Nvidia's GPUs [8].

If you squint, the AI boom in 2025 looks like a mash-up of every infrastructure mania America has ever seen. The railroad boom of the 1800s. The electrification push in the roaring 1920s. The fiber internet mania of the late 1990s.Each era had the same three ingredients: breathless enthusiasm, an overbuilt network, and—after the crash—a foundation that quietly powered the next several decades of economic growth.That is the irony of bubbles. They punish the wrong investors, but reward the right infrastructur ...