The debate over whether the AI trade is a bubble is largely moot at this point.
The buildout has already reached massive proportions, larger than any investment trend in living memory; larger than the dot-com bubble… and larger now than even the railroad buildout of the late 19th century.
As a consequence, everyone’s already in the pool… and borrowing more to swim extra laps.
Total U.S. margin debt is approximately $1.4 trillion through September 2026, down slightly from its peak near an all-time record of $1.5 trillion in mid-2026.
And while the percentage of total market cap sits around 2%, margin debt relative to other economic baselines has hit historic highs — reaching as high as 5.2% of U.S. gross domestic product (GDP) – and about 6.3% of the M2 money supply.
The phenomenon is not restricted to the U.S. economy or population. Global investors are exposed whether they own an “AI stock” or not:
- U.S. equities now represent roughly 44% to 48% of global stock market value — so a repricing of the AI-heavy U.S. market reaches portfolios worldwide.
- U.S. stocks make up more than 70% of the MSCI World Index, making “global diversification” far more dependent on American technology than many investors realize.
AI companies, the U.S. Treasury and private-credit managers are in a historic competition for the same global pools of capital — pensions, insurers, sovereign wealth funds, family offices and retail investors.
Looking ahead, one indicator suggests the global AI trade is still in its early days:
The data for today’s chart is released monthly, with South Korea publishing a 10-day estimate around the 21st of each month.
The average of Taiwan and South Korea export growth, pushed forward six months, closely tracks MSCI U.S. forward 12-month earnings per share (EPS) growth. Both countries are significant producers of the chips that underpin the AI investment boom.
In short, chip exports are likely to detect any slowing in the AI boom with about a three- to six-month lead.
Crucially, as of the October 15, 2026 publication, exports from South Korea and Taiwan currently give little sign that the investment cycle is turning down.
When they do turn, that’s also a cue for yields to decline, since chip exports lead nominal GDP.
Last week’s tech sell-off, as we explained yesterday, is par for the bull market course and contributing seasonal factors – necessary speed bumps in the AI buildout.
As Andrew’s Pro selection today indicates, the seasonal trade and a post-election rally are likely to give the bull another shot of testosterone, and a speculator may do well to go for the ride.
As always, we’re cautious. First, don’t invest more than you can afford to lose. Second, we’re looking closely at the global numbers. When chip exports slow, that’ll be our cue to head for the exit.
~ Addison
P.S. Politicians have plenty to say about the future. But where they’re putting their money might be more revealing.
With the midterm elections creeping up, Washington is gearing up for a political showdown. The results could change more than who’s in charge. They could reshape the policies, markets and investment opportunities ahead.
That’s why Andrew Zatlin joined us last week on Grey Swan Live! Andrew provided a lively discussion of the economic data, lawmakers’ own investments and the defense stocks he’s interested in now ahead of the midterms.
With investors searching for the next catalyst, these developments could offer important clues about where the market heads next.
Are your trading accounts set and taxes organized before the end of 2026?
With the end of 2026 in sight, now’s the time to make some year-end moves that could significantly save on your taxes, so we’ll also be hosting our friend Nick Buhelos from Prime Corporate Services on Thursday, October 22 at 2 p.m. ET.
Nick will show you how to legally minimize your taxes with smart, strategic planning — including using your membership in the Grey Swan Investment Fraternity as a tax-deductible expense against your investment gains.
More details on the way… watch your inbox.
