Bravos Research breaks down why the S&P just lost $2.5 trillion in market value and whether this is the beginning of the AI bubble finally popping.
Key Points
Key Highlights:
- Apple is down 12%, Amazon down 17%, and Nvidia down 18% from their highs, even though the broader S&P 500 is only down 3%, showing real cracks hiding beneath a calm surface
- AI hyperscalers are projected to spend almost 100% of their cash flow on AI capex in 2026, the same level of spending tech companies hit right before the dot com bubble burst in 2000
- The stock market's PE ratio has already dropped 15% in the past year, a decline only seen during the COVID crash, the 2025 Liberation Day correction, and the 2011 European debt crisis
- Despite this, earnings are melting up fast enough to completely offset the falling valuations, which is the only reason the market still looks fine on the surface
- Strip out the eight or nine hyperscalers and the rest of corporate America looks healthy, banking, industrial, consumer, and energy stocks are all growing earnings between 11 and 20% annually
Takeaway The bubble risk is real but it is concentrated in a tiny group of companies betting everything on AI, not the broader market. If this selloff continues it likely becomes a buying opportunity by year end rather than the start of something much worse.
