The AI Bubble’s Most Terrifying Bull Is Gearing Up

When it comes to AI, it’s a strong echo to the dotcom boom.

Nvidia, the poster child for the necessary hardware behind AI systems, is akin to that of router manufacturer Cisco.

Cisco shares soared thousands of percentage points in the 1990s, only to collapse once everyone had a PC connected to the internet.

Where exactly are we today in terms of a similar move? In a way, 2025 has looked much like 1998 – early into the bubble, but not quite at the blow-off top.

Financial markets, particularly the Nasdaq, are eerily lining up:

Turn Your Images On

The Nasdaq is following the dotcom rally of the 1990s to a T since the launch of ChatGPT (Source: Barchart)

Looking at how the Nasdaq is soaring since the launch of ChatGPT and overlaying it with the performance following the release of Netscape, the first commercial web browser, it’s another sign that AI is just an updated version of the dotcom boom.

Don’t be surprised if this time it ends the same way – a blow-off top ahead, playing into our Most Terrifying Bull Market thesis – before it all comes down.

For now, there’s still some money to be made. By the time everyone’s looking to ignore the fact that it’s a bubble and marginal buyers are all-in, it won’t take much to reverse course.

~ Addison

P.S.: While today’s chart suggests we’re closer to 1997 than 2000, remember, there were some steep pullbacks along the way during the dotcom boom:

The collapse of the “Asian Tiger” economies, the collapse of LTCM, rising concerns over Y2K…

Don’t chase this rally. Use healthy pullbacks to buy strong, industry-leading companies. Keep stacking gold and bitcoin. When worse comes to worst, you’ll come out just fine.

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

When it comes to AI, it’s a strong echo to the dotcom boom.

Nvidia, the poster child for the necessary hardware behind AI systems, is akin to that of router manufacturer Cisco.

Cisco shares soared thousands of percentage points in the 1990s, only to collapse once everyone had a PC connected to the internet.

Where exactly are we today in terms of a similar move? In a way, 2025 has looked much like 1998 – early into the bubble, but not quite at the blow-off top.

Financial markets, particularly the Nasdaq, are eerily lining up:

Turn Your Images On

The Nasdaq is following the dotcom rally of the 1990s to a T since the launch of ChatGPT (Source: Barchart)

Don’t be surprised if this time it ends the same way – a blow-off top ahead, playing into our Most Terrifying Bull Market thesis – before it all comes down.

For now, there’s still some money to be made. By the time everyone’s looking to ignore the fact that it’s a bubble and marginal buyers are all-in, it won’t take much to reverse course.

~ Addison

P.S.: While today’s chart suggests we’re closer to 1997 than 2000, remember, there were some steep pullbacks along the way during the dotcom boom:

The collapse of the “Asian Tiger” economies, the collapse of LTCM, rising concerns over Y2K…

Don’t chase this rally. Use healthy pullbacks to buy strong, industry-leading companies. Keep stacking gold and bitcoin. When worse comes to worst, you’ll come out just fine.

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.