The 45% Club

AI stocks are running hot. They’re not the only game in town… but they’re about half of it.

JPMorgan just reviewed all of the 500 companies in the S&P 500. A full 41 of them are AI-related. While that’s less than 10% of the index by total, it is over 45% of the index by market cap:

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The percentage of S&P companies in the AI trade has soared to nearly half the index’s value. (Source: Bianco Research)

Note that at the launch of ChatGPT in late 2022, these companies accounted for nearly 30% of the index’s value.

It’s just another way of looking at the narrow concentration that makes up today’s so-called diversified market index.

And another sign that, if any speed bumps occur in the AI story – which we expect will inevitably happen – the corresponding market reaction may be sizable.

Remember, stocks didn’t start falling when President Trump unveiled his “Liberation Day” tariff rates in April. The markets peaked in February, with China’s surprise announcement of the success of its DeepSeek launch.

~ Addison

P.S. Grey Swan Live! continues Thursday at 2 PM ET. This week’s guest is none other than George Gilder.

George once handed President Reagan the first microchip, and now he says today’s tech wave dwarfs the original $6.5 trillion tech revolution of the 1980s.

Eight exponential technologies — AI, quantum computing, robotics, self-driving cars, blockchain, chips, advanced biotech, and even space — are no longer advancing in isolation.

They’re colliding, compounding, and accelerating into what could be the single greatest wealth-building event of our lifetimes.

The pace is staggering. George just issued new research with our colleague Ian King, which you can review here before.

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

AI stocks are running hot. They’re not the only game in town… but they’re about half of it.

JPMorgan just reviewed all of the 500 companies in the S&P 500. A full 41 of them are AI-related. While that’s less than 10% of the index by total, it is over 45% of the index by market cap:

Turn Your Images On

The percentage of S&P companies in the AI trade has soared to nearly half the index’s value. (Source: Bianco Research)

Note that at the launch of ChatGPT in late 2022, these companies accounted for nearly 30% of the index’s value.

It’s just another way of looking at the narrow concentration that makes up today’s so-called diversified market index.

And another sign that, if any speed bumps occur in the AI story – which we expect will inevitably happen – the corresponding market reaction may be sizable.

~ Addison

P.S. Grey Swan Live! continues Thursday at 2 PM ET. This week’s guest is none other than George Gilder.

George once handed President Reagan the first microchip, and now he says today’s tech wave dwarfs the original $6.5 trillion tech revolution of the 1980s.

Eight exponential technologies — AI, quantum computing, robotics, self-driving cars, blockchain, chips, advanced biotech, and even space — are no longer advancing in isolation.

They’re colliding, compounding, and accelerating into what could be the single greatest wealth-building event of our lifetimes.

The pace is staggering. George just issued new research with our colleague Ian King, which you can review here before.

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

All these rumors could work out to Intel’s benefit. That’s something no investor can know. What we can know is that the road to recovery will be a rocky one, fraught with disappointments along the way. It is all but certain that at some point, Intel stock will once again be far cheaper than it is today. And at that later date, investors will have far more information to be able to judge the likely success of the promised comeback. We’re not going to buy the rumors. We will wait for the news.

There’s something about big, round numbers that draws investors like moths to a flame.

In the stock market, every 1,000 points in the Dow or 100 points in the S&P 500 tends to act like a magnet.

Now, after consolidating for five months, gold has broken higher to $4,000.

Overspending during periods of rising ASPs is self-destructive. For most products, today’s ASP increases result less from natural demand pull and more from supplier-enforced discipline. If memory makers treat them as justification for a capex binge, they will repeat past mistakes and trigger another collapse.

The $50 billion bull case for WFE in 2026 rests on a faulty assumption. Lam and AMAT may benefit from selective investments, but the cycle-defining upturn Morgan Stanley describes is unlikely.

Investors should temper expectations. If history repeats — and memory markets have a way of doing so — the companies that preserve pricing power will outperform, while equipment suppliers may find that the promised order boom never fully materializes.

Europe’s GDP has flatlined over the past 15 years, against a doubling in GDP for the U.S. and even bigger GDP gains in China.

While the U.S. leads the world in AI spending, and China leads in technology like drones, what does Europe lead the world in? Regulation.

They spend more time penalizing U.S. tech firms for regulatory violations than encouraging their own tech ecosystem.