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Tom Essaye Says Cheap AI Stock Valuations Could Signal This

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Tom Essaye said that cheap AI stock valuations could signal that investors are growing fearful that the data center boom could come to a halt.

‘Exactly how the dot-com bubble burst’: A market research firm says keep an eye on this AI warning sign

Tom Essaye, the founder of Sevens Report Research, said in a note on Wednesday that cheap AI stock valuations could signal that investors are growing fearful that the data center boom could come to a halt.

Typically, investors are willing to assign higher valuations to growth stocks because of their high future earnings potential. So the fact that some AI stock valuations are so low today means investors are skeptical that earnings potential will ever come to fruition, Essaye said.

“Think of it this way: GOOGL (to use one as an example) cancels building 10 data centers because it’s going to cost too much money and the return isn’t there,” he wrote. “That will result in massive order cancellations at NVDA, MU, AVGO, SNDK, etc., because no one needs the chips, networking, memory, or processor power,” he added.

A recent example of investor uneasiness, Essaye said, is the recent decline in Oracle stock. Shares of the company have tumbled about 25% since June 1 as it’s poured money into the AI buildout.

“To be fair, this fear has been around for several months, and it isn’t appearing yet. However, it’s not without precedent because this is exactly how the dotcom bubble burst,” he said.

“While people connected to the internet, their connection wasn’t nearly as profitable as quickly as everyone assumed,” Essaye continued. “Because of that, the buildout stopped.”

Also, click here to view the full article published in Business Insider on June 19th, 2026. 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.

You’re Seeing A Bounce And A ‘Buy The Dip Says Sevens Report

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The two underpinnings of the rally are really earnings and economic growth, Tom Essaye tells Barron’s.

The Dow Is Leading. Wall Street Is Selling Winners and Buying Losers.

“You’re just seeing sort of a bounce and a ‘buy the dip,’” Sevens Report Research’s Tom Essaye tells Barron’s. “The consumer is holding up really, really well. There are some concerns that increased price hikes into the coming months will continue to sort of strain consumer spending, but there’s just no real evidence that that’s happening yet.”

Essaye says that as long as the labor market holds on and AI spending continues to drive massive earnings growth, the market can keep chugging.

“All of this money being spent is essentially being just firehosed onto the economy by the hyperscalers, by investors that are just clamoring to build out these AI data centers, and it’s creating this, essentially additional stimulus program, that’s helping every sector of the market—every single one,” Essaye says. “If that is not self-sustaining, if all of that doesn’t have a net positive ROI, and it stops, then everything has a real big problem. But it’s not stopping any time soon.”

Also, click here to view the full article published in Barron’s on May 27th, 2026. 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.

Is This An “Earnings vs. Everything Else” Market?

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What’s in Today’s Report:

  • Is This An “Earnings vs. Everything Else” Market?
  • Weekly Market Preview: A Sneakily Important Week for Earnings, Economic Growth and Iran
  • Weekly Economic Cheat Sheet: Does May Economic Activity Stay Resilient?

Futures are extending Friday’s declines and are moderately lower as there was no progress on a U.S./Iran ceasefire over the weekend.

The UAE and Saudi Arabia reported limited drone attacks on energy infrastructure and while markets still expect a ceasefire, the chances of a resumption of fighting are rising.

Economically, Chinese data was soft, as Industrial Production (4.1% vs. (E) 6.0%), Fixed Asset Investment (-1.6% vs. (E) 1.7%) and Retail Sales (0.2% vs. (E) 2.0%) all badly missed estimates.

Today focus will remain on geopolitics as President Trump is meeting with his national security team and while not the majority expectation, the chances of a resumption of direct U.S. attacks on Iran are rising (and if that happens, markets will drop). Away from geopolitics, the only notable economic report is the Housing Market Index (E: 34) which shouldn’t move markets.

 

Memory In The Technology Space Is Now Skyrocketing Says Tom Essaye

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Memory In The Technology Space Is Now Skyrocketing Says Tom Essaye

What average investors should know about Fed nominee Kevin Warsh

“Memory that everyone needs in the technology space is now skyrocketing in price. How long can companies negotiate this? They’ve been doing an amazing job. The answer is not forever, so we can’t get complacent,” Tom Essaye, founder of Sevens Report Research, told Yahoo Finance.

Also, click here to view the full video published on Yahoo Finance on May 3rd, 2026. 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.

The Two Main Reasons Stocks Hit New Highs

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What’s in Today’s Report:

  • The Two Main Reasons Stocks Hit New Highs
  • Weekly Market Preview: Can Resilient Economic Data Keep Supporting Stocks?
  • Weekly Economic Cheat Sheet: Jobs Week (Jobs Report on Friday)

Futures are slightly lower as markets digest the latest U.S./Iran headlines, including the implication of “Operation Freedom” and a report a U.S. Naval vessel was attacked.

On Sunday, President Trump announced “Operation Freedom,” an operation whereby the U.S. military will help escort trapped tankers out of the Strait of Hormuz.

Iran’s reaction to this is unclear, but there are unconfirmed reports a U.S. naval vessel was hit by Iranian missiles and oil is rallying in response (and futures are slipping).

Today headlines from the Gulf will dominate markets and if there’s a resumption of attacks between the U.S. and Iran, expect oil to spike and stocks to drop.  Outside of geopolitics, New York Fed President Williams speaks (12:50 p.m. ET) and for markets, the more dovish he is, the better.

 

Monthly Bitcoin Update & Outlook

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What’s in Today’s Report:

  • Monthly Bitcoin Update & Outlook

Futures are moderately lower as markets extend Thursday’s selloff mostly on momentum and following some underwhelming economic data.

Chinese economic data was mixed as retail sales (2.9% vs. (E) 2.7%) beat estimates while Industrial Production (4.9% vs. (E) 5.5%) and Fixed Asset Investment (-1.7% vs. (E) 0.9%) missed expectations.

Today there are no notable economic reports but there are three Fed speakers: Schmid (10:05 a.m. ET), Logan (2:30 p.m. ET) and Bostic (9:20 a.m. ET, 3:20 p.m. ET).  If they’re tone is hawkish towards a December rate cut (as the commentary has been this week from multiple Fed officials) that will further pressure stocks.

 

S&P 500 Nears Key 50-Day Moving Average After Global Selloff

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Tom Essaye of Sevens Report flags 6,665 as the next critical support level.

As the stock market wobbles, this is the key level to watch for the S&P 500

U.S. stocks remained under pressure in premarket trading Friday as global markets sold off across Europe and Asia. With investors questioning how much further the market could fall, Sevens Report Research founder Tom Essaye pointed to the S&P 500’s 50-day moving average — currently at 6,665.75 — as the next key level to watch.

The index closed at 6,720.32 on Thursday, according to FactSet data. Notably, the S&P 500 hasn’t closed below its 50-day moving average in 132 trading sessions — the longest such streak since February 2007, Dow Jones Market Data reported.

Also, click here to view the full article published in MarketWatch on November 7th, 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.

Is Something Wrong with AI Enthusiasm?

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What’s in Today’s Report:

  • Is Something Wrong with AI Enthusiasm?
  • Weekly Market Preview: Can Earnings Help the Tech/AI Stocks Stabilize?
  • Weekly Economic Cheat Sheet: What Will Delayed Data Tell Us (Growth Stable, or Not?)

Futures are moderately higher as the Senate voted to, effectively, end the government shutdown later this week.

The Senate passed an important procedural vote late Sunday night that paved the way for the government to reopen later this week, ending the longest shutdown in U.S. history and removing an increasing economic headwind.

There were no notable economic reports overnight.

There are no economic reports today so focus will be on Fed speak (Daly at 8:30 a.m. ET), and earnings, as AI darling CRWV ($-0.39) reports after the close (and the stronger the report, the better for tech and the market).

Tom Essaye warns that most S&P 500 stocks are lagging as the index hits new highs.

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S&P 500’s Gains Look Deceptive Despite 16% Yearly Rally

SPX: Two Concerning Trends to Watch as Stocks Hit New Highs

The S&P 500 slipped 0.9% last Thursday, a modest pullback given its 16.2% year-to-date gain. But according to Tom Essaye, president of Sevens Report Research, that strength is “more than a little bit deceiving.”

Of the 503 companies in the index, only 144 — or 28.6% — are outperforming, while 227 are down for the year. Essaye noted that this imbalance raises questions about how sustainable the rally really is.

He also highlighted that the NYSE Advance-Decline Line fell to a 12-week low last week, even as the S&P 500 posted 14 record closes since September — a signal that far fewer stocks are moving higher during the rally.

Essaye concluded that while concentrated leadership is normal during long market advances, current extremes suggest risks are building beneath the surface.

Also, click here to view the full article on Moneyshow.com published on November 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.

Sevens Report Warns of Rising Risks as S&P 500 Breadth Weakens

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Tom Essaye cautions that half of S&P 500 stocks are down YTD despite record-level index.

Why risks of a stock-market drop are rising amid extreme concentration in the S&P 500, Sevens Report warns

Nearly half of S&P 500 stocks are posting year-to-date losses even as the index trades near record highs, according to Sevens Report Research. Founder Tom Essaye warned this divergence signals growing market fragility. “That is not so healthy,” he said, noting the risk of another sharp “air pocket” drop or a broader April-style pullback is rising daily. The top 10 S&P 500 companies now make up 40.5% of the index—surpassing the concentration seen during the 2000 tech bubble. Essaye also flagged weakening market breadth, with the NYSE Advance-Decline Line hitting a 12-week low and only 53% of S&P 500 stocks trading above their 200-day moving averages, the lowest since June.

Also, click here to view the full article published in MarketWatch on October 31st, 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.