Get Ready For A.I.-Mageddon | Fred Hickey

July 14, 2026

AI Summary

5 min read

In 2000, the Nasdaq fell 83%. Fred Hickey, who has been investing in tech for 47 years, sees the same pattern forming today—only this time the bubble is bigger, more concentrated, and built on an earnings mirage. The AI-linked stocks now account for 45% of the S&P 500's total market cap and nearly 70% of the Nasdaq 100. But Hickey argues that the profits powering those valuations are largely illusory, generated by a circular spending loop that is already starting to break down.

The Earnings Bubble No One Is Talking About

Hickey agrees with Jeremy Grantham that we are in "the greatest bubble in US stock history," but he adds a crucial layer: there is also an earnings bubble. The headline numbers look strong—first-quarter earnings grew 28%—but Hickey asked Gemini to strip out one-time gains and the revenue from hyperscaler suppliers like Nvidia and Micron. After removing those, the S&P 500's earnings growth dropped to single digits.

Continue reading the full summary in the app — free to try.

Read Full Summary →

Free • No credit card required

Listen to Audio Summary Open in App

Never miss an episode of Thoughtful Money with Adam Taggart

Get every new episode summarized in your inbox — free, ~5 minutes to read.

No spam. Unsubscribe anytime.

What you'll learn

1 (01:24) **Thesis: The AI Bubble Is an Earnings Bubble** - Fred Hickey argues the current market is the greatest bubble in US history, driven not just by stock prices but by an "earnings bubble" inflated by hyperscaler data center spending.
2 (07:59) **Circular Earnings and Hidden Costs** - The earnings boom is a mirage: hyperscalers' revenues are partly from mark-to-market gains on their AI investments, while their own future expenses are understated.
3 (11:28) **No Return on Investment** - The massive $750B+ spending binge is based on anticipation, not proven returns, and corporations are now questioning the economics.
4 (14:14) **The Rise of Cheap Chinese Models** - The cost structure of AI is collapsing as corporations shift to cheaper, open-source models, undermining the revenue expectations for frontier model makers.
5 (16:47) **Ego-Driven Malinvestment** - The spending spree was driven by billionaire egos and a fear of losing the AI race, not by sound economic modeling.
6 (19:23) **Financial Strain on Hyperscalers** - The hyperscalers are burning through cash, with Oracle, Amazon, and Meta spending 100% of their revenues or cash flows on data centers.
7 (20:56) **The Depreciation Time Bomb** - As data centers come online, depreciation expenses will soar, crushing future profits and making current P/E ratios misleading.

+ Full timestamped outline available in the app

Show Notes

AI-linked stocks account for a record 45% of the S&P 500's total market capitalization and drive nearly all of the gains it's had for the year so far.Note that's the S&P, the general market.These companies make up an even higher percentage -- nearly 70% -- of the NASDAQ 100's market cap.Will this new AI-powered Tech renaissance that will continuing powering the indices higher for years to come?Or is this extreme dependence of the markets on a single sector a major vulnerability, putting all our hopes in a handful of companies that may not be able to keep growing at the meteoric rates that Wall Street is expecting?For answers, we're fortunate today to speak with Fred Hickey, editor of the highly respected newsletter The High Tech Strategist, which Fred has been publishing since 1987.Fred fears the economic model for A.I. is "disintegrating" before our eyes, and that when these stocks sell off, they'll take the entire market down with them.

WORRIED ABOUT THE MARKET? SCHEDULE YOUR FREE PORTFOLIO REVIEW with Thoughtful Money's endorsed financial advisors at https://www.thoughtfulmoney.com#aistocks #marketcorrection #bearmarket _____________________________________________ Thoughtful Money LLC is a Registered Investment Advisor Promoter.We produce educational content geared for the individual investor. It’s important to note that this content is NOT investment advice, individual or otherwise, nor should be construed as such.We recommend that most investors, especially if inexperienced, should consider benefiting from the direction and guidance of a qualified financial advisor registered with the U.S. Securities and Exchange Commission (SEC) or state securities regulators who can develop & implement a personalized financial plan based on a customer’s unique goals, needs & risk tolerance.All the details on Thoughtful Money's relationship with the financial advisors it endorses, many of whom regularly appear on this program, can be found in the following documents. We highly recommend you review these documents as they cover the terms that will apply should you choose to work with one of these firms at any time after watching this video.Thoughtful Money Disclosure Document: https://thoughtfulmoney.com/disclosureThoughtful Money Agreement: https://thoughtfulmoney.com/agreementIMPORTANT NOTE: There are risks associated with investing in securities.Investing in stocks, bonds, exchange traded funds, mutual funds, money market funds, and other types of securities involve risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods.A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.Thoughtful Money and the Thoughtful Money logo are trademarks of Thoughtful Money LLC.Co