Jump to content



Photo

AI BUBBLE is here...


  • Please log in to reply
5 replies to this topic

#1 dTraderB

dTraderB

    Member

  • Traders-Talk User
  • 21,069 posts

Posted 22 January 2025 - 12:19 PM

Took longer than DOT COM but it has finally arrived & blooming. May take at least 6 months to start deflating. Enjoy the insane BULLISH trades but be careful, take profits, ensure less than about 30% of risk capital is "at risk to be totally lost"

#2 slupert

slupert

    Member

  • Traders-Talk User
  • 2,936 posts

Posted 22 January 2025 - 12:54 PM

Probably 2 more weeks until IT top. After new  months money comes in. Yields and equityies go up together then down together. (JMHO)



#3 12SPX

12SPX

    Member

  • Traders-Talk User
  • 15,000 posts

Posted 22 January 2025 - 12:56 PM

I think that is the biggest question out there.  Many people make the claim it is just getting going but when I look at history it started along with the computer in 1950.  In 1996 Deep Blue was invented and in the first year lost 5 of six games and then won them all the next year against the top player of the year.  Then there was Watson in 2011 who played on Jeopardy.  Generative AI started in 2020 and now we have chatgpt etc.  All of those companies are growing and expanding but we only see a few tech stocks that have really supported the market the past few years.  I personally think we are peaking in AI fang stocks and others will lead the way as just like the dotcom bust, the internet continued to grow over the years that followed but it was 15 years before the Nasdaq saw a new high...  We may in the end see some new highs this year but I'll be shocked if we get to double digit gains!! 



#4 dTraderB

dTraderB

    Member

  • Traders-Talk User
  • 21,069 posts

Posted 27 January 2025 - 06:30 AM

Happened quicker than I thought-- but this is just a warning. Real crash later in the year:
Adam Kobeissi (@TKL_Adam) posted at 6:56 AM on Mon, Jan 27, 2025:
DeepSeek has now erased $2 trillion worth of market cap in US stocks.

The biggest market headwind comes when you least expect it. https://t.co/vWLHob1rfG
(https://x.com/TKL_Ad...3467934850?s=03)

#5 linrom1

linrom1

    Member

  • Traders-Talk User
  • 4,546 posts

Posted 27 January 2025 - 09:56 AM

How much money did China make on this? People are looking for super AI computers, China drops Commodore64 and its the best AI ever according to whom?



#6 dTraderB

dTraderB

    Member

  • Traders-Talk User
  • 21,069 posts

Posted 12 February 2025 - 07:48 AM

AI bubble entering dangerous level zone. They git to start delivering or else a DOTCOM-like crash soon:
"Need to Know: Tech crash, Powell firing, bond turmoil these are one firms possible, if unlikely, gray swans

Also known as gray swans, strategists at BNP Paribas, took a look at possible extreme scenarios investors should consider for 2025. Our call of the day focuses on how the three biggest might materialize and what investors should do.

U.S. technology stock crash. The Magnificent 7 tech stocks now make up 33% of the S&P 500 SPX by market cap, and with valuations already high, a return to the long-term price/earnings average alone would mean a 30% selloff, says a team of strategists led by Viktor Hjort.



We think disappointments in GenAI monetization, efficiency improvements or a top line slowdown could trigger a selloff in U.S. equities. Our economics teams simulations suggest that a large equity correction, via the wealth effect, could spark a recession in the U.S., says Hjort and his colleagues.


Fed Chair Jerome Powell gets fired. Lets say the Fed fails to deliver big rate cuts demanded by President Trump amid a large stock selloff or jobs slowdown and Powell is out. BNP offers one scenario putting a Trump appointee at the top of the central bank and all Democratic-appointed governors rapidly replaced.

Despite the Feds operational independence over monetary policy, BNP points to a recent event. In early January, Trump fired a member of the National Labor Relations Board, which has similar protections to the Federal Reserve against removals. That official, Gwynne Wilcox, has said she might try to get the courts to reinstate her, which could set up a Supreme Court case to clarify whether Trump can fire officials in other agencies, such as the Fed, says BNP.

A trigger for this gray swan is tariff and immigration policies sparking higher inflation, forcing Fed rate hikes. That in turn could cause Trump to fret about the effect of lower stock prices and slowing growth on midterm elections for Republicans.

Where to hide? Damaged confidence over the Feds independence would see a pivot away from the U.S. dollar as the global reserve currency, and with that, large-scale U.S. asset sales, says BNP. The Japanese yen USDJPY could emerge as a haven. But appointing a more dovish Fed chair would cause a steepening of the yield curve longer-term yields rising faster than shorter ones on expectations of a less restrictive Fed.

A Liz Truss moment for U.S. Treasurys. The third gray swan harks back to 2022, when the former U.K. prime ministers short tenure caused surging U.K. government bond yields and financial markets chaos.

Possible investor doubts over the U.S.s fiscal sustainability could spark an unbounded rise in Treasury yields similar to that Truss crisis and with even worse consequences, the strategists warn. Poor U.S. fiscal discipline and rising issuance would cause bond vigilantes to sell Treasurys, driving yields higher, possibly during the third quarter of this year. If inflation hasnt progressed toward the 2% target, the Fed may not step in to control yields, with the 10-year possibly breaching 5% and heading to 6%.

Persistently higher Treasury yields could also hurt the valuation of risk assets, particularly U.S. equities (which currently enjoy historically elevated valuations) while also hurting growth as broad financial conditions tighten, said BNP. And of course, Treasurys risk-free status could get damaged.

The dollar could emerge stronger from such a crisis, but complicating matters for stocks are historically high stock valuations.

Gray swans, the strategists add, arent always negative. Other gray swans they identify include OPEC+ unity dissolving, the eurozone economy growing faster than 2% this year, a bull market emerging in Brazil, a flow-driven boom in Chinese stocks, commercial real estate loans driving up bank non-performing loans, a default cycle in private debt, and an AI productivity boom in the U.S. economy.
https://trkmw.dowjon...c.1bmn/aa869145