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AI Bubble Watch: Part 2

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What’s in Today’s Report:

  • AI Bubble Watch: Part 2

Futures are slightly higher following more mixed trade news.

Japanese stocks rallied after an announcement that the U.S. would “fix” an issue of tariff stacking that would result in some tariff reduction.

On gold, the U.S. may apply tariffs to Swiss gold imports, possibly disrupting to global physical gold trade.

Economically, there were no notable reports overnight.

There are no notable economic reports today but there are two Fed speakers, Musalem (10:20 a.m. ET) and Bowman, and if they join the growing “dovish” camp and hint at a September rate cut, that should help support markets.

 

Sevens Report warns of early signs of an AI-driven market bubble

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Sevens Report warns of early signs of an AI-driven market bubble

10 AI Stocks Analysts Are Watching Closely

The latest Sevens Report highlights growing concerns that AI-related stocks—especially chipmakers—may be flashing early warning signs of a bubble.

“Every bubble in modern market history has been based on a narrative,” the report states. “That potentially bubble-inflating theme is unquestionably AI technology.”

Much of the enthusiasm has centered around Nvidia (NVDA), but Sevens warns that relying on a single name can be dangerous. “There are a lot of various factors that can impact a single stock, including a ‘cult following’… a dynamic that has appeared to have emerged with NVDA as well.”

Instead, they recommend watching the broader Philadelphia Semiconductor Index (SOX), which includes multiple AI players like AMD, Qualcomm, and others. “It would be much more prudent to keep tabs on the broader-based semiconductor index, SOX,” they wrote.

The SOX hasn’t hit a new high since July 2024, even as the S&P 500 has climbed roughly 13% in that time. Sevens warns that if AI remains the sole driver of optimism, “this market is in trouble and at risk of rolling over sooner than later.”

Also, click here to view the full article published in Insidermonkey.com on August 4th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

AI Bubble Fears Grow as Chip Stocks Diverge From Broader Market

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Sevens Report urges caution as SOX index lags S&P 500 gains

5 big analyst AI moves: Microsoft upgraded on Azure growth, chip stocks PTs raised

Sevens Report Research warned Friday that a growing disconnect between AI chip stocks and the broader equity market could be an early signal of an “AI bubble.”

“Every bubble in modern market history has been based on a narrative,” the firm wrote, calling AI technology the latest potentially bubble-inflating theme.

While Nvidia often draws attention as the face of the AI rally, Sevens cautioned that single-stock enthusiasm—especially driven by a “cult following”—can obscure broader market signals.

“It would be much more prudent to keep tabs on the broader-based semiconductor index, SOX,” the report said. Despite strong gains in the S&P 500 since July 2024, SOX has failed to post a new high, raising red flags.

“If AI remains the primary source of bullish optimism… this market is in trouble and at risk of rolling over sooner than later,” the report concluded, likening the broader market to Wile E. Coyote running off a cliff.

Also, click here to view the full article published in Investing.com on August 3rd, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

How To Navigate An “AI Bubble” (If One Exists)

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What’s in Today’s Report:

  • How To Navigate An “AI Bubble” (If One Exists)

Futures are sharply lower following sweeping tariff announcements by the administration overnight.

The Trump administration made numerous reciprocal tariff announcements and while the vast majority of them were previously reported, the sheer volume of tariffs is weighing on sentiment.

Focus today will be on economic data and specifically the jobs report and ISM Manufacturing PMIs.  Expectations for the jobs report are: 110K Job-Adds, 4.2% UE Rate and 3.7% y/y Wages) while the ISM Manufacturing Index expectation is 49.5.

Given the early, tariff related weakness in stocks, a “Too Cold” jobs report or ISM Manufacturing PMI could accelerate the selling as they would compound worries that high tariffs will hurt future growth.  So, solid numbers from both are needed to push back on this morning’s tariff anxiety.

Finally, on earnings, today is the last meaningful day and some reports we’re watching include: BRK.B ($5.24), XOM ($1.49), CVX ($1.66), D ($0.69), CL ($0.89), KMB ($1.68).

 

The Next Phase of the AI Revolution

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What’s in Today’s Report:

  • The Next Phase of the AI Revolution
  • Why There Was De-escalation in the Trump/Powell Feud Yesterday

Futures are modestly higher following the announcement of a trade deal with Japan late Wednesday night, although underwhelming earnings are offsetting some of that news.

President Trump announced a trade deal with Japan and 15% tariffs on imports, a level not as bad as feared.

Tech earnings overnight underwhelmed, with ASML and TXN posting slightly disappointing results.

Today there is only one economic report, Existing Home Sales (E: 4.01 million), and it shouldn’t move markets.

So, focus will stay on trade and earnings. On trade, the Japan deal will raise hopes a similar deal with the EU can be stuck before next Friday.

On earnings, key reports to watch today include (in order of importance): TSLA ($0.28), GOOGL ($2.14), IBM ($2.64), T ($0.51), TMO ($5.22), FCX ($0.46), NEE ($1.01), TMUS ($2.69).

 

AI enthusiasm remains alive, well and raging!

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AI enthusiasm remains alive, well and raging!: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Large-Cap Chip Stocks Are Down Again. Will This Trend Continue?

“AI enthusiasm remains alive, well and raging!” Tom Essaye, founder of the Sevens Report, wrote Monday. “…Recent AI-related tech company earnings have been strong and despite concerns, the actual earnings growth around AI companies (especially chip and cloud companies) remains extremely strong.”

Also, click here to view the full Barron’s article published on June 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Is Investor Sentiment Getting Too Bullish?

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How Important Is AI to This Market? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Investor Sentiment Getting Too Bullish?
  • Why the FOMC Minutes Weren’t Hawkish
  • EIA Analysis and Oil Update

Futures are solidly higher following stronger than expected NVDA earnings and guidance.

NVDA results beat across the board as earnings, revenue and guidance all beat estimates while the company announced a 10:1 stock spilt and increased the dividend.  NVDA is up 6% pre-open and pushing futures higher.

Economically, EU and UK May flash PMIs were mixed but both above 50, importantly signaling economic expansion.

Today focus will switch back to economic data and the key report today will be the May Flash PMI (E: 51.0).  For now, investors still view “bad data as good for stocks” as it makes rate cuts more likely so a small miss vs. expectations should extend the early rally.  We also get the latest Jobless Claims (E: 220K) and again a small miss will be welcomed by investors.  Turning to the Fed, the surge of speakers subsides today as we only have one speaker, Bostic (3:00 p.m. ET) and he shouldn’t move markets.

Join thousands of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

How Important Is AI to This Market?

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How Important Is AI to This Market? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How Important Is AI to This Market?
  • Chart: Key Levels to Watch in NVDA Today
  • Fed’s “SHED” Release Takeaways Support Soft Landing

Futures are mildly lower as UK core inflation data failed to “cool” as much as hoped in April while traders await NVDA earnings after the close today.

Economically, the UK’s Core CPI figure came in at 3.9% vs. (E) 3.7% y/y in April, down from 4.3% in March which was a mild disappointment for broader global disinflation hopes.

Looking into today’s session it is a fairly busy day from a catalyst standpoint as we will get the latest Existing Home Sales report (E: 4.195 million) later this morning while the Fed’s Goolsbee is scheduled to speak at 9:40 a.m. ET.

As we move into the afternoon traders will be watching the results of a 20-Yr Treasury Bond auction (1:00 p.m. ET) before waiting on the release of the latest FOMC meeting minutes (2:00 p.m. ET).

Finally, some late season earnings could move markets with two notable retailers releasing results in the premarket: TGT ($2.05), TJX ($0.87) before all eyes turn the widely anticipated release of NVDA earnings ($5.55) after the close.

Bottom line, with stocks sitting on record highs investors will need to see economic data that remains “goldilocks,” the absence of any hawkish Fed surprises (i.e. consideration of rate hikes), steady yields, good retailer earnings, and solid guidance from AI bellwether NVDA to meaningfully advance beyond current levels.

Join thousands of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

The AI craze is a modern gold rush

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The AI craze is a modern gold rush: Tom Essaye Quoted in SwissInfo.ch

Tech Giants Drag Down US Stocks After Torrid Rally: Markets Wrap

“The AI craze is a modern gold rush, and the tech ‘picks and shovels companies’ are seeing earnings explode as companies buy chips and cloud space to fuel the boom,” said Tom Essaye, founder of The Sevens Report. “But if AI doesn’t result in increased profitability for the rest of the S&P 500 over the coming years, then demand for AI chips will evaporate as will AI-related cloud demand.”

Also, click here to view the full article published on February 14th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Lastly, If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Market Multiple Table Chart: Bullish Momentum vs. Fair Value

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Market Multiple Table Chart: Bullish Momentum vs. Fair Value: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table Chart:  Bullish Momentum vs. Fair Value
  • EIA Analysis and Oil Market Update

Futures are modestly higher as stocks rebound from Wednesday’s late day dip ahead of key economic data.

Economically, the only notable number was Swedish CPI which rose 2.5% vs. (E) 2.8% and that’s reinforcing summer rate cut expectations.

AI enthusiasm got a small boost overnight as Apple supplier Foxconn posted optimistic guidance on strong AI server demand.

Today focus will be on economic data, especially Jobless Claims (E: 218k) and Retail Sales (E: 0.8% m/m).  Continuing claims (contained in the jobless claims report) and retail sales disappointed recently and if we see that again, it’ll add to growth concerns and could hit stocks.

On inflation, we also get PPI (E: 0.3% m/m, 1.1% y/y) and given CPI ran a touch hot, it wouldn’t be a surprise if PPI did the same.  But, it’ll likely take a much hotter than expected number to hit markets (because they’ve already priced in the slightly hot CPI report).

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.