The Real Eisman Playbook Steve Eisman's 2025 Wrap Up: 4 Themes Defining the Market Today | The Weekly Wrap
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Dec 19, 2025 In this year-end analysis, key themes shaping the market are explored. The K-shaped economy reveals stark disparities in stock performance despite overall gains. A debate on whether AI is a true revolution or just a bubble raises concerns about scaling challenges. The hidden risks of escalating private credit draw attention, while the affordability crisis highlights supply constraints in housing. Each of the S&P sectors showcases varied performances, shaped by these overarching market dynamics.
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K-Shaped Growth Driven By AI CapEx
- The 2025 economy is K-shaped with growth concentrated in AI-related CapEx while the rest of the economy barely grows.
- Thirty-seven percent of S&P stocks are down despite a strong headline index, showing extreme dispersion.
AI's Virtuous Cycle Has Two Fragile Links
- AI demand from hyperscalers is real and fuels an enormous hardware cycle, but two risks could reverse it: power constraints and intellectual limits to scaling LLMs.
- If scaling LLMs hits diminishing returns, chip demand and the virtuous AI cycle could collapse.
Power Is The Hidden Constraint For AI Data Centers
- Power constraints are the current binding constraint for building AI data centers and can delay hyperscaler expansion.
- Delays in power availability would slow chip orders and could reverse the AI-driven market rally.