The last good year... The great contra-indicator goes to Idaho... 'Winners of the New World'... Why I'm not telling anyone to sell yet... Five of the past six earnings booms ended the same... Where the next 1,000% winners are already emerging...
Editor's note: Today, we're bringing you another guest essay from our colleague Whitney Tilson.
Yesterday, Whitney went live with a free presentation delving into why today's AI-fueled bull market has taken him "back in time" to the late 1990s and the buildup of the dot-com bubble...
Rather than buying flashy tech stocks like everyone else back then, Whitney went a different route with his hedge fund – and it paid off when the bubble burst. The same strategy also worked in 2008 amid the financial crisis.
If you missed his presentation, you can watch a replay here at your convenience. We suggest you do. Just for tuning in, you'll learn the stock at the top of Whitney's buy list right now and one stock to dump immediately.
In the meantime, Whitney picks up where he left off last Friday... about why 2026 could go down in the market history books – and the importance of being ready for both sides of the AI bubble...
All you have to do is swap two letters for one word...
As I (Whitney Tilson) read all the back and forth on AI, over and over again, I keep thinking the same thing: If you substitute the word "Internet" for "AI," it's the same as 1999/early 2000.
AI, like the Internet, is a revolutionary, world-changing technology that some early adopters and companies are using to massively benefit.
But as the Internet bubble inflated, the spend far outpaced the demand, resulting in circular financing and terrible companies achieving absurd valuations – a classic bubble that burst, taking the great companies down 80%... and the lousy companies to ZERO.
There's little doubt in my mind that we're in a similar AI bubble right now – but I'm much less certain of how much further it will inflate and when exactly it will burst.
Are we in early 1999, when Internet stocks doubled over the next year before crashing? Or are we in early 2000, on the edge of the precipice?
In today's essay, I'll explain exactly where I think we are in the market... why I'm not rushing to sell my stocks yet... and where I see tremendous value today...
The great contra-indicator just went to Idaho...
Last month, CNBC's Jim Cramer visited a construction site in Idaho for a Micron Technology (MU) semiconductor plant. He complained that "there's an incredibly jarring gulf between stock prices and reality" and that "Micron's stock is radically undervalued."
This is significant because, for decades, Cramer has been a great contra-indicator.
It reminds me of his infamous "Winners of the New World" speech on February 29, 2000, just 10 days before the Nasdaq Composite Index peaked. In it, he named 10 Internet-related stocks and said...
We try to own every one of them. Every single one. And if I had my druthers, I wouldn't own any other stocks in the year 2000. Because these are the only ones worth owning right now in this extremely difficult, extremely narrow stock market. They are the only ones that are going higher consistently in good days and bad. I love every one of them, just as I loathe the rest of the stock universe.
Within 15 months of his speech, the basket of stocks lost more than 80% of its value. By 2009, all 10 companies were either bankrupt, delisted, or acquired for a tiny fraction of their peak bubble valuations.
The leaderboard tells you what kind of market you're in...
I think history is likely to repeat itself with the AI bubble... And make no mistake, we are living through a bubble.
Consider that outside of drugmaker Moderna (MRNA) and oil company Marathon Petroleum (MPC), the best-performing stocks in the S&P 500 Index from the beginning of the year through the end of August are all beneficiaries of the AI-infrastructure boom:
I looked at what the same list looked like in the last stage of the Internet bubble. Sure enough, they were all tech stocks – Qualcomm (QCOM), Oracle (ORCL), Adobe (ADBE), and Apple (AAPL) among them – reflecting the Internet craze at the time.
It reminds me of what Mark Twain is reputed to have said: "History doesn't repeat itself, but it often rhymes."
But I'm not urging my readers to sell just yet...
For one thing, earnings growth for companies in the S&P 500 has been off the charts this year.
According to Charlie Bilello's Week in Charts, as of August 18, second-quarter earnings growth of 29% was "the biggest upside surprise in history." And growth has risen to more than 50% year over year – the highest quarterly growth rate in five years.
As a result, Bilello notes...
S&P 500 earnings are now expected to surge 32% in 2026, more than double the 15% growth expected at the start of the year.
And growth has been climbing steadily for the past three years, up 10% from 2023 to 2024 and 13% from 2024 to 2025, as this chart from Charlie shows...
This growth is largely driven by the AI-infrastructure bubble.
Earnings of tech companies in the S&P 500 soared 71% year over year in the second quarter. That's all the more remarkable considering just one year ago, these companies saw less than one-third of that growth, as this chart from Ritholtz Wealth Management's Matt Cerminaro shows...
Given that the S&P 500 is "only" up about 12% this year – far less than earnings growth – simple math dictates that the index's price-to-earnings multiple has gone down this year.
That means stocks are cheaper and therefore a better buy today than they were at the beginning of the year, right?
Not so fast...
The other sides of extreme earnings growth...
Five of the six periods of extremely high earnings growth in the past quarter century – all but last year – have preceded significant market drops.
My friend Doug Kass of Seabreeze Partners Management agrees that strong earnings per share ("EPS") don't equate to strong price gains. He argues that this year offers a combination of unique market challenges compared with prior periods. From one of his recent pieces, he cites:
- High and rising inflation and interest rates.
- A burgeoning deficit and U.S. debt load may be a permanent condition giving the general lack of discipline from both parties in Washington, D.C.
- Improvisational geopolitical and fiscal policies that present threats to political and economic stability.
- Both parties are moving to extremes – the Republican party more to the right and the Democratic party to the left. With a possible Democratic congressional majority win in November, anti-corporate policy (higher corporate taxes, etc.) may be in the offing.
- Traditional valuation metrics in the 98th percentile, two standard deviations above the average.
- The AI capital spending spree and gains from investments have inflated S&P profit reports... an earnings reckoning may lie in the not too distant future.
I think Doug is right that huge corporate earnings growth likely won't translate into a comparable rise in stocks.
Unlike Doug, I'm not bearish on stocks in general – with the exception of the AI bubble. When it bursts, stocks that have soared during this boom – such as CoreWeave (CRWV) – will undoubtedly crash.
But there are plenty of stocks that aren't likely to decline at all...
While investors are fawning over red-hot AI stocks like Sandisk (SNDK), Dell Technologies (DELL), and Micron, they're completely ignoring a corner of the market where I've grown extremely bullish in recent months.
Yesterday, I sat down on camera and discussed the major shift I see coming to the market for the first time in nearly 30 years. It's the same opportunity that helped me make my name on Wall Street back in 1999.
As I said, I feel like I've traveled back in time.
Big tech stocks have been driving the market. But it's time to prepare for a new group of unknown names to take the lead. And it could hand investors 1,000% returns.
I want to do everything I can to help you position your money while there's still time.
In my presentation, I shared more details about the group of stocks I'm recommending folks buy now. On the surface, they have nothing in common. But when you look closer, there's a connection that binds them together...
I also shared the name and ticker symbol of my very favorite stock to buy right now... and one to dump immediately. Check it out. If you missed the debut of my presentation, you can watch a replay right here.
New 52-week highs (as of 9/10/26): Chord Energy (CHRD), iMGP DBi Managed Futures Strategy Fund (DBMF), and USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (SDCI).
In the mailbag, we received a few notes from people who missed my presentation yesterday. As we covered above, you can now watch a replay here... And, as always, send your comments and questions to feedback@stansberryresearch.com.
Regards,
Whitney Tilson
New York, New York
September 11, 2026
