The AI Bull and Bear Case
It's like a manifesto for the next decade of AI automation...
Last week, CNBC released its annual "Disruptor 50" list. These are the companies that 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.
These include Carbon Robotics, which just launched the world's first "Large Plant Model." Its AI system is trained on 150 million plants to blast weeds with lasers. Another is WHOOP, which just 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 was second on the 2026 edition. Databricks, a data-intelligence platform, came in third. And Anduril got bumped down to No. 4.
One thing is clear... Disruption has two letters: AI.
In total, 43 of CNBC's top 50 disruptors claim "AI is essential to their disruptive business models." And these companies are attracting a lot of capital...
The 50 firms saw funding of $337 billion – up from last year's tally of $127 billion.
Their valuations get even bigger. These companies have a total implied valuation of $2.4 trillion. That's roughly triple the $798 billion from last year's companies.
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.
And it tells me we're getting close to an AI bubble.
Again, these 50 companies have a combined estimated valuation of $2.4 trillion. That's roughly equal to the economy of Canada. The problem is, few of these companies are turning a profit.
That's just one of the warning signs about AI stocks. Another colorful example is the craziness behind Allbirds' drastic pivot into AI, which we wrote about last month.
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 – mostly chasing the roaring AI bull market.
When cash levels drop this low, it's a classic sign of a major market top.
Also, not all stocks are part of this raging bull market. As you can see below, only a handful of S&P 500 Index stocks are making new 20-day highs...
This makes sense. Stock prices usually follow profits. While the big mega-cap stocks are becoming more profitable, the average company in the S&P 500 (excluding financial stocks) is treading water.
We can also see that this is a highly concentrated market rally through the "advance/decline" line.
The advance/decline line takes the number of stocks that went up in a given day and subtracts the number of stocks that went down. The line rises as more stocks go up, and falls as more stocks go down.
In a healthy bull market, as stocks rise, the advance/decline line usually follows. When the advance/decline line moves lower while the market continues to go up, it's time to worry. This means that gains in stocks are concentrated in only a few companies.
And that's exactly what happened just before the dot-com bubble burst...
We're on a similar trajectory today...
Now, none of this proves that the AI bubble is about to burst. And several other indicators show that the bull market still has room to run...
First of all, while stocks aren't all performing equally, the divergence hasn't gotten crazy. As you saw from the dot-com chart above, markets can move higher for many months, even years, while the advance/decline line falls.
Also, based on history, we're still relatively early in this AI 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.
This current AI bull market trails the peak of the 2000 dot-com boom (looking at tech stocks), the housing boom in the 2000s (measuring homebuilding stocks), the post-COVID tech rally (using Cathie Wood's ARK Innovation Fund), and even the biotech bull market following the financial crisis (the iShares Biotechnology Fund). Take a look...
I mentioned all the unprofitable names in the CNBC disruptor list. But this AI bull market is also backed by real, unprecedented cash generation.
In 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. Projected capital expenditures for the major hyperscalers now total around $725 billion.
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.
This bull market might have a long life ahead of it... Or the best-performing names could be due for a big crash. No one knows for sure.
Given all this uncertainty, you may be wondering what's the best way to invest in the market today. My colleagues Marc Chaikin and Jonathan Rose have an answer...
They believe we've entered a new era where big, volatile moves in either direction are the norm rather than the exception.
So they've developed a strategy that can thrive in both bull and bear markets... one built to withstand rapid market swings and major global events – plus offer outsized gains when times are good.
The crux of their strategy is their new "Convergence Trigger." This tool helps identify which stocks and funds institutional investors are flocking to or running from. With it, you can use market volatility to your advantage instead of reacting to it.
Marc and Jonathan are going on camera tomorrow, May 28, to explain their new Convergence Trigger strategy and how it can work for you. Their event is free to attend, but you must sign up in advance. Check out the details here.
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Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
May 27, 2026