The AI Bull Case

Editor's note: Today's bull market is one of the hottest in history, and there's no doubt about what's driving it: AI. At this point, the only question is how long this trend can continue. In this issue, adapted from his free Health & Wealth Bulletin daily e-letter, MarketWise CEO Dr. David "Doc" Eifrig argues that we could still be in the early innings... 

It's like a manifesto for the next decade of AI automation...

In May, CNBC released its annual "Disruptor 50" list of companies it expects to have a huge impact on our lives in the years to come.

Nearly half of the companies are new to the list this year.

Newcomers include Carbon Robotics, which just launched the world's first "Large Plant Model." Its AI system was trained on 150 million plants to efficiently blast weeds with lasers. Another is WHOOP, which raised a massive Series G round of funding at a $10.1 billion valuation to dominate AI-driven health tracking.

The company in the top spot also changed this year...

Anthropic, which makes the Claude AI chatbot, jumped from No. 4 in 2025 to No. 1 this year – replacing autonomous-weapons company Anduril.

ChatGPT maker OpenAI is No. 2 this year. Databricks, a data-intelligence platform, came in at No. 3.

One thing is clear... Disruption is about two letters: AI.

In total, 43 of the 50 firms claim that "AI is essential to their disruptive business models." And these companies are attracting a lot of capital...

They saw funding of $337 billion this year – nearly triple last year's $127 billion.

Their valuations grew even more. These companies had a total implied valuation of $2.4 trillion – roughly triple last year's total of $798 billion.

A Boom Unlike Any Other

Now, early-stage tech investing isn't the right fit for my newsletters. I prioritize cash flows and consistent dividend track records. But I did give this year's disruptors list a close look.

Again, these 50 companies had a combined estimated valuation of $2.4 trillion. That's roughly equal to Canada's GDP. The problem is, few of these companies are turning a profit.

And broadly, investor sentiment is high. Most everyone is fully invested in stocks – which means not much money is left on the sidelines to keep pushing prices higher.

The chart below shows Bank of America's private-client cash holdings as a percentage of its total assets under management ("AUM"). These are high-net-worth individuals managed by Bank of America's Global Wealth & Investment Management division.

As you can see, wealthy investors have taken almost all their money off the sidelines and put it to work in stocks.

When cash levels drop this low, it's a classic sign of a major market top. But this doesn't prove that the AI bubble is about to burst.

In fact, history suggests we're still relatively early in this bull market.

Using the PHLX Semiconductor Sector Index (SOX) as a proxy for the current AI bull market, we're way below the highs of previous bubbles. Take a look...

While many AI firms are not yet profitable, this bull market is being supported by real, unprecedented cash generation.

In contrast, during the dot-com bubble of 1999, profitless startups relied on high-interest debt and speculative venture capital. But most of the AI boom's infrastructure build-out is coming from Big Tech companies – the most profitable businesses in human history.

The sheer volume of capital pouring into AI data centers, chips, and power infrastructure is staggering. Hyperscalers are projected to spend around $725 billion on capital expenditures this year.

Big Tech firms like Alphabet (GOOGL) and Microsoft (MSFT) aren't borrowing their way into the AI era. They're writing checks using their own profits.

In the end, my takeaway is this...

It's clear an AI bubble is forming. Investors need to be cautious about what they own. But it could be months, or even a year or two, before this bubble pops.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig

Editor's note: AI is reshaping practically every industry on the planet – including ours. Yesterday, Doc unveiled his brand-new, AI-driven stock-picking system, which produced 100% win rates on several stocks in back testing. Combined with his fundamentals-based approach, this new tool promises to be an investing breakthrough.