Since OpenAI’s ChatGPT ignited popular interest in AI in October 2022, the U.S. stock market has been in a wild bull market.
The AI trade has invited data statisticians to contort themselves into all kinds of uncomfortable positions to make comparisons with the dotcom frenzy of 1999-2001.
Here we go again.
So far, the data suggests we may be entering the late stage of the great AI bull market, but there’s still more room to run.
Since 1957, seven of the 10 major bull markets have survived beyond three years, and each of those was positive in the 12 months after its third birthday with a median return of 13.2%:
Since Eisenhower occupied the Oval Office, bull markets that have lasted at least three years have stretched to four years 7 out of 10 times (Source: ProCap Insights)
“Bull markets don’t die of old age,” the old timers will tell you. A euphoric market ends when there are no more bullish investors left to buy at nosebleed high valuations. One tell the end is nigh? A highly visible company reports blowout earnings… and shares sell off.
This past season, we’ve seen evidence that investors are getting nervous about massive capital investment at the high end of the S&P 500.
Here are just a few shocking stock market reactions from these current AI spending disclosures:
Alphabet (GOOGL): Slipped ~7% post-earnings when soaring AI data-center investments led to negative free cash flow, overshadowing strong cloud revenue growth.
SpaceX (SPCX): Fell about 12% to 14% after reporting that second-quarter capital spending ballooned to $18.4 billion—with $15.8 billion dedicated strictly to AI infrastructure—overshadowing otherwise solid headline revenue beats.
Tesla (TSLA): Dropped between 14% and 17% following results showing operating costs and AI/autonomous vehicle spending growing faster than revenue.
Western Digital (WDC) & SanDisk (SNDK): Experienced “sell the news” drops of 13% and 9% respectively despite beating sales forecasts, as high-flying memory and data-center momentum plays faced sharp valuation corrections.
The signs are there… and there’s seasonal weakness to worry about, too… but the “data suggests” that, so far, if there is a selloff, it will be isolated to specific, highly visible names.
For now.
At this stage, it’s a stock picker’s market.
We expect space, robotics and some more visible tech startups to remain sources of speculation. After weakness in the first half of 2026, we’re also due for a strong rotation of capital into natural resources, precious metals, critical minerals and energy.
Today’s Grey Swan Pro recommendation is a speculative play on space, post-SpaceX IPO.
~ Addison
