Alright, let's get one thing straight: this whole "AI boom" narrative? It's smelling more and more like the dot-com bubble 2.0. But with extra corporate greed sprinkled on top.
The Magnificent Seven vs. Everyone Else
So, the S&P 500 is up, what, 12%? Big deal. Dig into the numbers, and you find out it's just seven freakin' companies – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla – carrying the entire damn index. They're calling them the "Magnificent Seven." I call 'em the "Usual Suspects."
Meanwhile, the S&P 493 – the other 493 companies in the index – are basically dragging their asses. Sales slowdowns, investment pullbacks... Sounds like a real economy to me, not some AI-fueled fantasy.
Moody’s chief economist, Mark Zandi, says it's AI "tailwinds" versus deglobalization "headwinds." Give me a break. It's more like a hurricane hitting Main Street while Wall Street throws a champagne party.
And get this: Nvidia's stock is up, like, a thousand percent over two years. A thousand! That ain't growth; that's a goddamn lottery ticket. Palantir, Micron, Vertiv—they're all cashing in, too. But what about the little guys? The Russell 2000, full of small and mid-cap stocks, is down 4.5%. Opposite day, apparently.
Tariffs, Rates, and Rigged Decks
Experts are blaming tariffs and high interest rates for the small-cap struggle. Okay, sure, that's part of it. Small companies can't just eat the extra costs of tariffs or shift their supply chains overnight. And they rely on borrowing money, making them vulnerable to rate hikes.
But let's be real—this is about more than just economics. It's about power. Big corporations have the resources to weather these storms. Small businesses? They're getting drowned. Investors are pulling their money from small caps and throwing it at the "AI beneficiaries." It's a self-fulfilling prophecy.
Then there's the whole "diversification" argument. Torsten Slok, chief economist at Apollo, says the S&P 500 is basically an "AI index" now, with one-third of its value concentrated in those seven companies. So much for spreading your risk around, huh? K-shaped economy can also be found in S&P 500, says Apollo, with Magnificent 7 the winners
Offcourse, the Nasdaq is showing some cracks, down 7% from last month’s peak. And Michael Burry is out there calling BS on the long-term profitability of AI. Maybe he's right, maybe he's not. But the fact that people are even talking about an AI bubble should be a massive red flag.
If these big tech stocks tank, it could drag the whole damn economy down with them. All this "wealth effect" – the idea that rich people spend more when their stocks are up – could vanish overnight. Consumers stop spending, the economy slows down... It's a house of cards built on hype and hope.
Wait a minute... Are we seriously betting the entire U.S. economy on whether Nvidia can keep printing money?
So, What's the Real Story?
This whole "AI revolution" is just another way for the rich to get richer, and for everyone else to get screwed. The S&P 493 is proof that the game is rigged, and the house always wins.