No. of Recommendations: 6
For active links, go to
https://discussion.fool.com/t/control-panel-ai-fre...https://www.wsj.com/finance/stocks/the-ai-frenzy-i...
The AI Frenzy Is Back and Lifting the Entire Stock Market to Record Highs
Signs of froth are everywhere, with the IPOs of Anthropic and OpenAI expected to be the biggest ever and investors desperate to find ways in
By James Mackintosh, The Wall Street Journal, April 26, 2026
…
Here are a few facts often missing from the discussion about how stocks have performed since the U.S. and Israel started bombing Iran at the end of February:
In the S&P, 118 stocks have fallen more than 10%, notably those now facing higher costs for fuel, aluminum and other raw ingredients, or those dependent on sales to customers hit particularly hard, such as farmers. That compares with only 82, mostly AI-related, that are up more than 10%.
Exclude the AI version of the Magnificent Seven stocks—Broadcom alongside Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia—and the market value of the S&P is actually down. Put another way, these seven are lifting the entire market.
The average U.S. stock has fallen almost as much as the MSCI All Country World Index excluding the U.S., because more than half the S&P members are down. Yet the U.S. index is up 4%, and the tech-heavy Nasdaq 8%, because the biggest stocks are so big they more than offset the falls elsewhere.
Half the S&P’s sectors are down. Two of those that are up—consumer discretionary and communications services—are, like the market, dominated by a large AI company. A majority of the stocks in those sectors fell....
Signs of froth are everywhere in AI. The IPOs of Anthropic and OpenAI are expected to be the biggest ever, and investors are desperate to find ways into the stocks before they list…
Hope overcomes every obstacle: The risk that AI becomes a widely available commodity, the constant hallucinations, repeated business-model pivots by OpenAI, massive investment requirements, deep uncertainty about the technology, rising political opposition and doubts about customers’ willingness to pay… [end quote]
The dot-com bubble burst was preceded by an infrastructure build-out that didn’t pay off for years. The same is happening now with AI.
I asked Gemini, "How much is being spent on AI data centers in 2025-2026? How much of that is from company earnings and how much from debt? What is the sales of AI services to end-users who are not part of the “AI ecosystem”? "
||Total Data Center Capex (Projected)
|2025|~$500 Billion
|2026|~$750 Billion|
From Earnings (Internal Cash Flow): Roughly $400 Billion of the 2026 spend is funded by operational cash flow.
From Debt (External Financing):
Investment-Grade Bonds: AI-related corporate bond issuance surpassed $200 Billion in 2025 and is projected to double to $400 Billion in 2026.
Market Size: Global AI services and software sales to external enterprises are projected to reach $390 Billion in 2026. While 78% of organizations have started using AI, only 39% report a significant impact on their EBIT (earnings).
Companies are spending $750B on infrastructure to chase ~$390B in realized end-user revenue.
If Kevin Warsh removes the “Mild QE” lubricant from the repo markets, the debt-funded half of this build-out becomes much more expensive. The market is currently betting that AI productivity will “catch up” to the debt before the interest expense consumes the earnings. If that productivity doesn’t materialize in non-tech sectors by late 2026, the “AI Bubble” jitters you’re seeing in the press will likely turn into a structural re-pricing. [end quote]
It’s likely that Kevin Warsh will be approved as the new Chair of the Federal Reserve in two weeks. Warsh believes that Fed meddling in the economy by manipulating the fed funds rate, QE and other monetary moves upsets the market’s discovery of true interest rates.
The Fed has reversed QT and has been gradually increasing QE since the beginning of 2026 in order to keep liquidity available at the current fed funds rate. This is part of the Fed’s policy of ample reserves.
fred.stlouisfed.org
Assets: Total Assets: Total Assets (Less Eliminations from Consolidation):...
Assets: Total Assets: Total Assets (Less Eliminations from Consolidation): Wednesday Level
Warsh believes that the free bond market should set the level of interest rates. Without Fed suppression the rates would rise.
Warsh believes that rising debts will cause Congress to reduce deficit spending. I think this is self-delusion for two reasons: 2/3 of federal spending is mandatory entitlement programs, over 14% is interest on the debt, taxes have been cut and spending on defense is rising. Also, Congress is motivated by politics and they can’t agree on even the simplest matters, much less a total overhaul of the federal budget.
The markets are ignoring the impacts of the war on Iran. The markets are ignoring a wall of corporate debt that was borrowed at low rates in 2020-2021 but will mature in 2026-2027 at much higher rates.
The SPX reached a new high. The Fear & Greed Index was in Greed. The trade was risk-on. CAPE is over 40. There has been a rotation out of some tech stocks and into value stocks. But the SPX is still 40% “Mag 7.” Since 50% of the market is SPX index funds, anything that triggers selling of the “Mag 7” stocks will force selling of all the stocks in the index, most of which are much less liquid than the Mag 7.
The Treasury yield curve was positively sloped and hardly moved at all.
The Chicago Fed’s National Financial Conditions Index (NFCI), which provides a comprehensive weekly update on U.S. financial conditions in money markets, debt and equity markets, and the traditional and “shadow” banking systems, showed that money loosened.
Gold, silver, USD and oil stabilized.
The Atlanta Fed’s Latest GDPNow Estimate for 2026:Q1 was 1.2%.
The METAR for next week is sunny. The market is in full bubble mode.
Wendy
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
CNN
Fear and Greed Index - Investor Sentiment | CNN
CNN’s Fear & Greed Index is a way to gauge stock market movements and whether stocks are fairly priced. The index uses seven market indicators to help answer the question: What emotion is driving the market now?
stockcharts.com
Dynamic Yield Curve | StockCharts.com
Visualize the relationship between interest rates and stocks over time using our draggable, interactive yield curve charting tool.
chicagofed.org
National Financial Conditions Index: Current Data - Federal Reserve Bank of...
fred.stlouisfed.org
Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted...
Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis, Inflation-Indexed
atlantafed.org
GDPNow
GDPNow forecasting model provides a "nowcast" of the official estimate prior to its release by estimating GDP growth using a methodology similar to the one used by the US Bureau of Economic Analysis.
Multpl
Shiller PE Ratio - Multpl
Shiller PE Ratio chart, historic, and current data. Current Shiller PE Ratio is 40.66, a change of +0.32 from previous market close.
