Another Sign the Blow-Off Top Is Coming

Chipmaker Nvidia is up over 500% in the past five years. Its market cap, closing in on $5 trillion, boggles the mind. That’s just one reason why it reminds one of Cisco during the dotcom bubble.

Yet, shares trade at 50 times earnings — pricey even for a growth stock — but nowhere near the 500 times earnings of Palantir.

In 2020, you could have bought shares of Nvidia at 50 times earnings. And in 2025. The fact of the matter is, Nvidia’s valuation has held fairly steady – with its share price soaring as its earnings soar.

That’s also a big drive for the massive rally in the S&P 500:

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There’ s still more room for stocks to run as prices haven’t yet exceeded earnings growth (Source: Carson)

If history continues to rhyme, we expect a final parabolic move higher to be in the works for the stock market. One that may kick off near the end of the year and move into 2026.

That final push higher will finally see a divergence – with soaring stock prices amid a backdrop of slowing – or even evaporating – earnings.

When that happens, retail investors who would usually be cautious on stocks may throw that caution to the wind, just as cautious investors in 1997 and 1998 joined the relentless bull market mentality in 1999 – and the playout of our forecast for a terrifying bull.

~ Addison

P.S. Exuberance for AI has forced a massive concentration in a historically few stocks such as Nvidia. Fortunately, there are pockets of extreme value elsewhere in the market.

That includes materials, commodities, mining and energy stocks, as the Trump administration pushes for a stronger industrial policy and more domestic production.

Gold, jumping to $3,850 this morning, will likely catch retail interest as central banks push prices higher and the Trump administration forces monetary changes. Our forecast for significantly higher gold prices continues to move in the right direction, and can play out even as the AI bubble meets its inevitable pin.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

Chipmaker Nvidia is up over 500% in the past five years. Its market cap, closing in on $5 trillion, boggles the mind. That’s just one reason why it reminds one of Cisco during the dotcom bubble.

Yet, shares trade at 50 times earnings — pricey even for a growth stock — but nowhere near the 500 times earnings of Palantir.

That’s also a big drive for the massive rally in the S&P 500:

Turn Your Images On

There’ s still more room for stocks to run as prices haven’t yet exceeded earnings growth (Source: Carson)

If history continues to rhyme, we expect a final parabolic move higher to be in the works for the stock market. One that may kick off near the end of the year and move into 2026.

That final push higher will finally see a divergence – with soaring stock prices amid a backdrop of slowing – or even evaporating – earnings.

~ Addison

P.S. Exuberance for AI has forced a massive concentration in a historically few stocks such as Nvidia. Fortunately, there are pockets of extreme value elsewhere in the market.

That includes materials, commodities, mining and energy stocks, as the Trump administration pushes for a stronger industrial policy and more domestic production.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

Copper and resources are sending us a cleaner market signal than AI stocks.

Channeling Ludwig von Mises, we observe this morning that price is not just a number; it’s information. Price reflects what buyers and sellers collectively believe: demand, scarcity, fear, speculation, disappointment, future expectations and available supply.

When prices rise, and inventories fall at the same time, the message is usually straightforward: buyers need the stuff, and there is not enough of it.

A low VIX does not predict disaster. It measures complacency. A serial skeptic will read it as the calm before a storm. We shook off that feeling this morning and opted to pursue an opportunity instead.

Here goes:

A VIX reading below 15 means the market is not pricing in much near-term trouble, even though there are obvious risks still sitting in the room: Iran, oil prices, memory chip speculation, circular financing, high valuations, epic high concentrations, spiking long-term interest rates, a regime change at the Fed, a meltdown in Japan and a historic deficit and rising national debt.

Money is not flowing in a clean, straight line from outside investors to productive businesses. The firms at the top are investing in and buying from each other.

Microsoft and OpenAI are the easiest examples to follow.

Microsoft says OpenAI has contracted to purchase an additional $250 billion in Azure services, while Microsoft continues to account for $13 billion in funding commitments to OpenAI as an investment.

At this stage, it’s a stock picker’s market.