Nvidia’s earnings beat—reporting 62% YoY revenue growth and projecting $65B in Q4—solidified its position as the AI chip leader. Yet, the question for investors is not if the AI boom is real, it’s how much you pay? The massive AI capital expenditure by giants like Google and Meta is transforming them from “asset light” platforms to “asset heavy” infrastructure owners. This shift, coupled with the unanswered question of whether the returns on this spending will justify the massive increase in assets, is fueling investor unease and market momentum loss
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Market Correction Chorus Grows
Goldman Sachs are warning of a 10-20% correction within the next 12-24 months. And whilst saying this would be a healthy outcome – it aligns with stretched valuations seen only during the dot-com bubble, according to the Shiller CAPE Ratio. The market’s risk is concentrated: returns are currently driven by a handful of mega-cap tech stocks. As Michael Burry’s short of Palantir highlights, the issue isn’t business quality, but the extended prices being paid. From mine, better opportunities exist outside the Mag 7.
Gold: Has it Gone Too Far?
While the S&P 500 trades at a rich 24x forward earnings, its gains are heavily concentrated in the ‘Mag 7,’ whose towering Price-to-Free Cash Flow multiples (eg AMZN’s 174.4x) suggest a market dangerously “priced to perfection.” But a deeper unease is driving gold. Up over 50% this year, its rally resembles the 2011 credit downgrade panic, fueled by fears of currency debasement and US fiscal recklessness, despite moderate 3% inflation. With gold’s recent 8.5% plunge hinting at volatility, investors may be wise to trim those spectacular gains, while the Mag 7 face an extremely high earnings bar