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.

America’s role in the world isn’t that of the world’s policeman (a temporary post-World War II role foisted upon the U.S. due to the Cold War) or as the destination of immigrants (for most of the 20th century, when we saw the most significant increases in individual incomes and quality of life, the U.S. didn’t accept many immigrants). Instead, the role the U.S. has played throughout its existence is as the world’s leader in the production, adoption, and socioeconomic integration of new technologies. We figured out how to do it successfully first, and the world followed.

AMD’s deal with OpenAI is another echo from 1999. OpenAI agreed to buy six gigawatts’ worth of AMD chips — products that don’t yet exist — in exchange for warrants on 160 million AMD shares, about 10% of the company. AMD stock jumped 24% overnight.

And then there’s Oracle’s $300 billion OpenAI contract — five times OpenAI’s annual revenue. Oracle’s stock soared 43% in a day, making Larry Ellison $100 billion richer.

Relative strength, or RSI, provides investors with a quick glance as to how much the market likes or hates a given asset. The correction is a welcome event for hard asset investors.

With the metal back under $4,000, our thesis remains untouched.

In fact, the pullback – while sharp and severe – makes gold a less expensive insurance policy against geopolitical shocks and other Grey Swan events.

On the current trajectory, online and offline tribal warfare, with events that range from assassinations to riots to sabotage, is inevitable. Worse still, with both sides waging moral warfare (good versus evil), there is no middle ground, rendering compromise impossible.

To avoid this, the government could step in to crack down on illegal immigrants, serial criminality, and activist blue cells to slow the ramp in extrajudicial violence from the red tribe. This would reduce the chance we see a rapid escalation in tit for tat violence. However, to do this, it would need to designate many activist groups as terrorist entities and pursue them with the degree of vigor we saw with Islamic radicals after 9/11.

And then there’s Oracle’s $300 billion OpenAI contract — five times OpenAI’s annual revenue. Oracle’s stock soared 43% in a day, making Larry Ellison $100 billion richer.

Relative strength, or RSI, provides investors with a quick glance as to how much the market likes or hates a given asset. The correction is a welcome event for hard asset investors.

With the metal back under $4,000, our thesis remains untouched.

In fact, the pullback – while sharp and severe – makes gold a less expensive insurance policy against geopolitical shocks and other Grey Swan events.