US equity market overvaluation driven by AI
The US stock market is heavily overvalued with a CAPE ratio of 40, driven by an over-extrapolated AI narrative that faces a potential pullback due to lagging enterprise adoption and circular CapEx.
The argument
The guest argued that while AI will bring long-term changes, current valuations are double the historical average of 18. They noted a circular 'supplier is customer' feedback loop in AI CapEx and pointed out that actual enterprise-level workflow integration remains underwhelming.
The thesis, stress-tested
✓ What validates it
- ✓A slowdown in hyperscaler CapEx guidance
- ✓A decline in semiconductor quarterly revenue growth
▸ Risks discussed
- ▸Hyperscalers continue unlimited CapEx spending indefinitely
- ▸Rapid monetization of agentic AI tools like coding assistants
Hear it yourself
"What conclusions or what actions are you drawing from this new world we're we're living in? Less bonds? I think nominal bonds in particular are not necessarily an investment that I think, makes as much sense as it did in, you know, historically. And so as we think about how to diversify that equity risk, Well, there's the strategies I talked about before. There's also things like tips in commodities. Now let's put commodities aside for a minute because, you know, we can talk a lot about commodities, and that leads us to, you know, the the geopolitical, you know, environment that we're in. But our premise for a long time is that inflation is going to be higher in the future than it's it's been historically."
05:10
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE