The $31 Trillion AI Stock Bubble: When Will It Crash? (NVDA, QQQ, SOXX)

[00:00:00] Speaker 1: Hey folks, welcome to verifiedinvesting.com. My name is Gareth Soloway, Chief Market Strategist here. Now in today's video, we've got a deep dive into the insanity that is the stock market. You've got crypto collapsing, right? Bitcoin continuing to come down towards that 60,000 level. You've got gold and silver that have basically stopped moving, but the semiconductors continue to push the market up. And I mean that it's literally just the semiconductors. If you take out the semiconductors, the top 20 to 25 stocks in the semi sector this year, the S&P would actually just be flat. In addition, the advanced decline line continues to be basically neutral to negative, which shows you that a few handful of AI stocks continue to lift the market up. Is it a bubble? No doubt. Do we know when it will bust? No idea. So we're going to dive into this. I want to start with the NASDAQ 100, because again, I think this is a very interesting chart. So the first thing I want to look at is where we were going back to April. Remember, this was the tariff sell-off implications and the rebound. And what I think is kind of interesting here is if we look at how many days have passed since the low recently on March 30th, we've now hit, as of yesterday and going into today, we've hit 44 bars, right? 44 bars. So comparison-wise, how was that towards last year? Now, last year was a much bigger sell-off in 2025, right? We saw the S&P 500 collapse down from the recent high, a total of 25, or I should say the NASDAQ 100 collapse 25%. In this situation, we only dropped 12.7%. So it was a bigger drop, which in theory, you should have got a sharper reaction to the upside. But if we look at this and we take a look at the data here and we go 44 candles out from that bottom, and we see exactly where that is, let's find out where that market was, like where was it in percentage terms. So what we'll do here is we'll take the low of the tariff sell-off to the 44th candle high, and we were up 33%. If we do the same thing here for 44 candles, we are up 34 and a quarter percent. That's not taking into account what we are opening up a little bit on today. So what's fascinating about this, and again, I'm just fascinated by these technical things. I mean, this is the stuff that gets me excited every day to analyze. What can I find out? It's almost like you're digging for a diamond in the rough, right? And you just never know what you're going to come across. Ultimately, even though the 2025 sell-off was much sharper, 25% on the S&P versus about half of that here, we've had a bigger, sharper rally than what we saw last year in 2025 over the span of the same 44 days or candles. All right. Very, very interesting there. Now, when we're talking about finding technical resistance levels, this is where it gets really tricky, right? Because when you go this vertical and you go, so we broke out of that parallel, right? We had that old parallel that I had discussed. I was so confident that that would be some major resistance, and it just shows you how literally I'm not going to be right every time. I mean, just not that not the nature of the beast is not allowing for perfection in the markets. So this was, I was so convinced we were going to see a high here, and it just blew right through. We did get a minor hit and a small pullback, and then once it went through, you can see it's continued on. So the question is, well, where is the next resistance? Now, to do that, what I'm finding is we've got to look at, so number one, we can draw a few trend lines here. So this would be that first one, but what we can see here is we've actually already eclipsed that one. So what I have to do is once we get to these vertical nature moves, we've got to flip over to the logarithmic chart. Now, the logarithmic chart, for those of you that aren't familiar with it, it allows us to look from the regular linear chart, which is in dollar amounts to in percentages. And the reason why that's important is that, you know, a move from $1 to $2 is 100%, right? So that's a big 100% move. But when you're at $100, you got to go up to $200 to get that same 100% move, right? So by using the logarithmic, it kind of allows us to look at things more in percentages versus in dollar amounts, which can be very misleading when you're looking at long-term charts over the course of many, many years. All right. So what we have here now is we have the logarithmic chart. And again, a couple of things have my attention here. There is a trend line right here that I am monitoring very, very closely, right? And again, this still shows that we could still go up a little bit further, right? But what we have here is a low pivot from 2023, kisses here in 2024. Then we go over here to 2024 late. That hits it again. We finally break below. Then we hit the underbelly right here. And right up here, about 20 points higher on the QQQ. So again, that's not a huge amount. That's about what? Three, you know, it'll be about three to 4% higher. That's where that line comes in, right? So again, it does tell us there could be a little bit more upside. Now, I think it's important to recognize that it seems like every time, I mean, I don't know if you guys are following the intraday markets, but every time the markets look like they're going to roll over, the semi can trade is going to roll over. Then someone comes out, either the president, someone in his administration talks up peace with the Tharan and the Straits reopening, or lately it's been Jensen Wong making comments in Taiwan at the conference where he talks up Marvell. Oh, it could be the next trillion dollar company. By the way, Trump picked up Marvell a few months ago, MRVL. Good gains for him. Good job. Again, not saying it's shady, but it's a little suspect. I'll just throw that out there. In any case, by the way, he also had Dell. He also picked up Dell. He's a good stock picker. That's for dang sure. But in any case, the point here is that as we see this market go up, it's getting more and more extended, but we need to look for these kind of factors that are looking like they could cause trouble. Now, one thing I want to show you guys is how insane this is. And so to do that, take a look at this graphic that I created. This graphic, guys, and again, this is the total, the top 25 AI stocks and their market cap. And if you combine those, what is it? It's 31.5 trillion. What's the total rest of the market cap of the entire market? Every stock out there totals 44.3 trillion. This now is the highest concentration ever in the market of any one sector. In the dot-com era, it got to about 37% or so. That was at the height of the 2000 dot-com bubble, dot-com stocks and related, which would have been like infrastructure for the internet and stuff. That got to about 37%. And so it just kind of shows you how amazing it is. But I will say this, like I was saying about how this news comes out, it's very similar to the market seeming to be wanting to be held up into these IPOs. Now next week, we're going to get the big one, SpaceX. And then literally a week or two later, probably Anthropic, then OpenAI. And institutions do not want the market selling ahead of those. Because if you all of a sudden get in a bear sell-off where people are panicking, then the investing public, and by the way, SpaceX is selling more shares than almost any other company in history allocation-wise to the retail trader. They are selling more than anything to the retail trader in this IPO. It's very, very interesting. And by the way, insiders like employees do not have a lockup period either, which I think is very, very interesting. Usually IPOs, there's like a six-month, nine-month, a year lockup for these people that are getting the shares early. But I digress. The point is, if we look at this, this does, again, how do you not concern? Now listen, I thought 20% ago, the semiconductors would have run out of steam. They continue to power higher on the incredible moves. But I do think it's important to kind of take note that you have a scenario here where the advanced decline is horrendous. The S&P without the AI stocks would be flat to negative for the year. I mean, it is showing us that this is a very concentrated area of the market. All the money or majority of it is flowing into this area. The question is, again, when does it deflate? Now, I do want to go to a few other charts here and just take a look because I do think it's worth taking a look at some of these other ones. So let's jump back to the QQQ chart here and take a quick look. All right. So now if we look at the Qs, we have this logarithmic trend line, are there any other major trend lines there? And you could argue that, again, there's this secondary level right here, which kind of coexists right at that same spot. High pivot here from 2022 to high pivot right there. And again, it's going right up to that level. And again, right now we're trading pre-market at around 748. This is about 763. So it's not a huge move up. Like I said, it's about three, 4% to the upside, but that would be of interest if we get up into there to kind of keep an eye on in terms of the levels. All right. Now, if we go to the socks, the S-O-X-X, same thing. You got to look at it in logarithmic terms because there's, I mean, this vertical move has been absolutely incredible. And to do that, we have to say, okay, well, what about, what if we connect all of these? And this is where things start to get a little bit more interesting. So again, notice what I'm doing here. I'm taking essentially all of these highs right along here. Okay. Now you can see it pierced here, kind of kissed here, kissed here, pierces here, goes right to there. We could even extend this back right into this area. But the point is, we're very, very close to that level as well. And so again, I strongly have to just say that for me, this is an uncharted territory. I've never seen a bubble this big. I did experience the dot-com bubble early on. I experienced other things like the housing bubble in 2005 through 2007. But by far, this is the biggest one by far. And again, we know bubbles can be bubbles for long periods of time. We don't know when they will drop, but that's where the charts come in to tell us. A couple other things to go over here. I do think it's interesting to kind of continue to watch things like NVIDIA. NVIDIA had that good pop on that announcement the other day. It's down again today or flat to down. So yesterday, it popped up again on that same sort of new chip news, and it came in and closed negative. This to me is still a leading indicator. And I am watching to see, do we get a head and shoulders pattern here? Right? So again, that could be something to keep an eye on, a potential head and shoulders, if we can get the right shoulder to form on NVIDIA. We would need this as our neckline. This would be our break point right here. And what's interesting is if that breaks, you take the measured move, right? So we take the high from here. We draw a plumb line down. And then from wherever it breaks, we do our plumb line down. And what we can see is this trend line is quickly kind of sloping up. And let's just say it takes a little bit of time. This might actually be the target down here, which is this bigger, longer term trend line right there. So kind of interesting to see that on the NVIDIA chart. And again, I'm looking at leaders. Now remember Broadcom, which is up this morning, did hit a key trend line. If we flip off of the logarithmic back to linear, look at that beautiful trend line. It's up right up into that level again today, but they report earnings after the bell. And that will be interesting. Yesterday, Palo Alto PANW reported earnings. The stock initially popped and then it came all the way back in. It is moving back up just a little bit, but again, interesting because there was a lot of hype that AI was going to start going into these and they've had incredible runs. I mean, look at the run on Palo Alto networks because of AI and cybersecurity against AI. But again, today it is lower. The question is again, the leaders, right? Where are we going to see Micron top out? Where are we going to see some of these other ones top out on the charts? All right, just a reminder guys, I'm getting close to 400 premium members on my, on this YouTube channel right here. If I get to 400 today, I will do a video. I found a small cap. All right. I usually don't talk about small caps, but because it's a small group here and I feel like people that are members that they probably understand, obviously they like and understand the methodology of, of, you know, the, the probability they'd understand the risks. So this small cap obviously is risky, but it's like one of those things that's like a 10 X potentially, maybe more. Um, it also could go down and go, go, you know, it's just the nature of the beast, but I will do a video on it either later today or tomorrow when I hit 400 paying subs on this YouTube channel. So again, uh, it means the world to me, the comments, the kind words, you know, showing the support for the channel to help the channel keep growing. Um, I think even YouTube loves seeing that we're seeing these memberships build so quickly. It's helping my reach on my last few videos, even more so. So I want to thank you for that. As always guys, I will keep you posted. Talk to you soon. Take care.