#market-valuations

#market-valuations

Tech analyst and professor Scott Galloway has issued a stark warning regarding the highly inflated valuations of the Magnificent 10 mega-cap companies, asserting a financial collapse at generative AI leader OpenAI would trigger a systemic shock leaving "nowhere to hide" for investors across the global markets. Galloway, speaking on his Prof G Markets podcast, characterized the current market reliance on AI as precarious, noting AI has been responsible for 80% of the stock market returns since the launch of ChatGPT in late 2022.

Yet some analysts are saying that you should believe the hype. They argue: Corporate demand for AI tools is real and growing. AI build-out is being funded by hard cash from tech company balance sheets, not risky debt. Stock valuations are not as extreme as they were in the dotcom crash of 2000. And even if a crash in AI did happen, the fallout wouldn't tip the U.S. into recession.

Markets often rally in anticipation of rate cuts but then decline when the actual rate cuts are implemented. J.P. Morgan's trading desk recently warned that despite stocks setting "more than 20 all-time highs this year," the Federal Reserve's next rate cut "threatens to curb investors' zeal" through a potential "sell the news" drop. The S&P 500 is up almost 33% from its lows in April and is up nearly 13% for 2025.