Just 7 stocks make up nearly half the entire S&P 500 index value. Either AI will usher in a golden age of prosperity, or we’re all gonna die . . .

Photo above – 81 year old Larry Ellison (founder of Oracle) saw his personal fortune soar $100 billion in a single day last month, when he teased that his company might have too many AI orders to fill on time. Accompanying octogenarian Ellison is Irina Osipova, a Ukrainian model who he began dating when she was 19.

Whenever corporate America decides that enormous scale is their only option, does disaster invariably follow? Was the 2008 housing crash caused by Wall Street and too-big-to fail-banks believing their best idea was jumping into the zero-down mortgages to bad FICO score applicants? Was the dot.com crash caused by everyone believing that everything with “com” in its name was to die for, despite having zero profits? What should we expect next of the 7 AI companies on which much of the stock market value is underpinned?

Do you feel safer, or get more worried, if you hear that the S&P 500 is valued (market cap) at nearly 4 times what the America’s entire GDP is? Should i be more concerned about egg inflation, or stock market inflation?

The normal P/E ratio (price to earnings ratio) for a company’s stock is 10-15. (If you need the price-earnings 101 introductory course, please, google it.). How are the magnificent 7 AI stocks doing on that basis? NVDA is at 50 P/E. It has a market capitalization of $5 Trillion (with a T). Microsoft has a market cap of $4 trillion, and a P/E of 40. Apple also has a market cap of $4 trillion, and P/E of 40. Google (Alphabet) has a market cap of $3 trillion, and P/E of 30 – apparently, they’re a laggard ? Meta, Amazon, Oracle . . . the list goes on. Oracle’s company value rose $200 billion IN ONE DAY, and their PE is now 70. The trigger for this explosion? Founder Larry Ellison said they have a backlog of orders.

Remember when AOL.com, Ebay, and Geocities were must-have stocks?

My hope is that all these high-flying AI stocks announce ever more fantastic products/updates. And these products are all excellent, and attract millions of satisfied users. That all the 7 survive, and our retirement accounts are not shot to pieces because we are invested in S&P 500 mutual funds, which is like buying AI as our main investment.

I also had a dream that one day that America would reduce its $37 Trillion national debt, build affordable housing, and return the Social Security Trust fund to solvency. We all have dreams, right?

I’m just sayin’ . . .



If AI is a bubble, the economy will pop with it - The Globe and Mail