The Magnificent Seven stocks at the centre of the artificial-intelligence boom have risen around 30 per cent as a group since April.Brendan McDermid/Reuters
It seems like a lifetime ago, but remember when everyone went hysterical for artificial intelligence stocks last year?
Regular investors clambered for AI names at any cost, bragging of their fast returns on investing forums, while the pros warned of an asset bubble, before the whole thing came crashing down in a storm of tariffs and turmoil.
Well, maybe get ready for round two.
The AI trade is heating back up. Big Tech is booming again and it may only be a matter of time before the masses whip themselves into another frenzy.
While financial markets may have briefly turned against AI, the industry itself never slowed down. In fact, adoption is happening at warp speed.
Consider that it took ChatGPT just two months to reach 100 million users. YouTube took more than four years to reach the same threshold. Twitter took five years. Netflix took more than a decade.
The warp-speed adoption
of artificial intelligence
It took ChatGPT just two months to reach 100 million users,
compared with more than 10 years for Netflix
ChatGPT
0.2
TikTok
Fortnite
Disney+
Snapchat
YouTube
Spotify
Telegram
Uber
10.3
Netflix
0 years
2
4
6
8
10
12
the globe and mail, source: bond capital
The warp-speed adoption
of artificial intelligence
It took ChatGPT just two months to reach 100 million users,
compared with more than 10 years for Netflix
ChatGPT
0.2
TikTok
Fortnite
Disney+
Snapchat
YouTube
Spotify
Telegram
Uber
10.3
Netflix
0 years
2
4
6
8
10
12
the globe and mail, source: bond capital
The warp-speed adoption of artificial intelligence
It took ChatGPT just two months to reach 100 million users, compared with more than 10 years for Netflix
ChatGPT
0.2
TikTok
Fortnite
Disney+
Snapchat
YouTube
Spotify
Telegram
Uber
10.3
Netflix
0 years
2
4
6
8
10
12
the globe and mail, source: bond capital
Morgan Stanley estimated that AI technologies will have penetrated half of American households within three years.
Here is what Amazon.com Inc. AMZN-Q CEO Andy Jassy said in his annual letter to shareholders a couple of months ago: “Increasingly, you’ll see AI change the norms in coding, search, shopping, personal assistants, primary care, cancer and drug research, biology, robotics, space, financial services, neighborhood networks – everything.”
Within the Big Tech incumbents, there is a limitless speed and enthusiasm that investors are coming back around to.
The Magnificent Seven stocks at the heart of the AI era are up around 30 per cent as a group since April. That practically wipes the slate clean after they tanked by 30 per cent this past spring.
Membership may need to be expanded to include Broadcom Inc. AVGO-Q, which is possibly the hottest AI stock going. The chipmaker’s shares have gained 70 per cent since early April, vaulting the company’s market cap above the US$1-trillion threshold.
Nvidia Corp. NVDA-Q, the poster child for last year’s AI excesses, is a hair away from its January peak, hit just before its stock went into freefall.
And the IPO pipeline is bursting with AI unicorns whose public market debuts were delayed when volatility consumed financial markets.
The AI hangover has worn off and a palpable excitement is starting to build.
“I believe we’ll likely see the current AI excitement evolve into an actual market bubble one day,” said Chris Stuchberry, senior portfolio manager at Wellington-Altus Private Wealth.
But that day is not today, he said. “Many companies are integrating AI into their business models, which will probably drive valuations significantly higher.”
He cited Reddit as an example. This past week the social media company announced some new AI-driven advertising tools, which sent the stock up by nearly 20 per cent.
Investors seem to be growing more comfortable taking on risk in a fraught macro environment. It has taken some time to get one’s bearings in Trump 2.0.
The President’s all-out global trade war caught many off guard who were expecting a more business- and market-friendly agenda. When stocks tanked globally, AI names were vulnerable by virtue of their rich valuations.
The funny thing is, markets have stormed back even though few of the big risks have subsided.
The stock market has detached itself from the real world
U.S. President Donald Trump is still waging an economic war with the world, with the effective U.S. tariff rate sitting at 15.6 per cent – the highest since 1937, according to the Budget Lab at Yale University.
The U.S. is flirting with dangerous levels of debt and enormous deficits that have roiled the Treasury market.
Economic indicators are softening around the world, suggesting that tariffs are starting to drag down global growth.
And now a new front has opened up in the Middle East conflict. Rockets are flying and the U.S. is apparently contemplating joining in Israel’s attacks on Iran.
And still the stock market keeps rising. Not just in the U.S. The MSCI All-Country World Index hit a record high just last week.
“The intensification of Middle East tensions comes at a tricky time for investors,” Jonas Goltermann, deputy chief markets economist at Capital Economics, wrote in a note. “Adding geopolitical risk to the uncertainty around U.S. trade and fiscal policy makes an unpredictable environment even more so.”
You’d never know it, however, looking at how the stock market is behaving, which is something bordering on utter indifference. In one sense, it speaks to the ability of financial markets to look past immediate economic pressures, not to mention human suffering.
In defiance of the doomsayers, the market seems to be reverting to what we saw in 2023 and 2024 – a global updraft in equity prices led broadly by the U.S. tech sector with a superheated AI contingent at its core.
Buckle up.