Animal Spirits Podcast Animal Spirits Take Las Vegas
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Nov 15, 2025 Michael and Ben dive into the role of AI in finance, debating if it’s a bubble or a genuine opportunity for investments. They analyze the S&P's recent performance and compare it to historical trends, while discussing the substantial capital spending driving AI infrastructure. The duo also examines the implications of market concentration in tech, particularly for retirees. Additionally, they explore the rising prominence of private credit, its appeal post-2022, and the necessity for advisors to communicate risks effectively to their clients.
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AI Explains Recent Market Gains
- AI is driving big market gains but the recent rally isn't yet ‘‘off the charts’’ compared with past cycles.
- The last three years' 88% S&P return reflects AI’s arrival but five-year returns look more moderate.
Hyperscalers Are Burning The Boats
- Big tech capex has exploded, with hyperscalers spending hundreds of billions on data centers and AI infrastructure.
- Firms prefer overspending now because undershooting AI capacity is seen as the greater risk.
Market Concentration Is Real
- Market concentration is extreme: the MAG-7 market cap equals stocks 52–500 combined.
- That concentration reflects real revenue power, not just speculation, for companies like Apple.
