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AI warnings are back, but Wall Street is in no hurry to exit. After a brutal sell-off in shares of some of the biggest AI infrastructure companies, the bulls are calling it, well, they're calling it nonsense. Another scare, not the beginning of the end. And some of the biggest names in finance confirm this.
But Wall Street may have a different message. They say, "We've seen this before." And, as always, the sell-offs and panic were exaggerated. Welcome to the " Big Money Show". I'm Marcus Lemonis, along with my co-hosts Lou Bazenese, David Asman, and the incomparable Jackie DeAngelis. And also with us for this hour is Fox Business Senior Correspondent Charlie Gasparino.
I thought he would say I was incomparable. Wait until he says it, I want to hear what he says after the show. Yes, no adjectives yet. Do n't worry. We've seen this movie before. This is a message from the biggest proponents of AI trading. Deep pricing, SaaS apocalypse. Whenever trade came under pressure, it held up.
And the profits confirm this. Corporate profits are rising, unemployment is low, and people continue to spend. Listen, the American economy seems to be on the rise right now. These are good times, you know, corporate profits have increased significantly. And the good news is, here's the thing , I don't like to speculate about the economy.
I like to look at the factors that drive it, and then you can add probabilities. Corporations do not have excessive leverage. Consumers do not have excessive leverage. Unemployment is really low. It's debatable whether wages are rising enough for the lower classes, probably not, but they have jobs. And that's the single most important thing for most people—that they have a job and can work.
And most people, contrary to what you hear, like their jobs. But Jamie Dimon's optimism is refreshing, but the new demand may be real, the technology may be genuine, and investors may still overpay for it. Charlie will now tell us why the bubble is about to burst. Well, I don't know when, and by the way, Jamie Dimon made it sound like it was a Trump campaign ad.
Because you know why? He's worried that Elizabeth Warren will head the banking committee. He is worried about the socialists running for office. And a week ago he was pessimistic, we were talking... And so when you ask the average American about the economy, listen, I understand that the headline numbers are great, and I don't deny that.
They don't think it's that great. So, that's why Donald Trump's ratings on the economy are low, whatever it is . Now let's move on to AI and this tech bubble. It is worth noting that comparisons or analogies with customs should not be used. First, Trump backed down from his crazy tariffs, right? So the market somehow digested it.
Still, the tariffs affected inflation. If you want to know why the 10-year bond is at this level right now, part of the reason is tariffs, and that affects the market. So I would take that out of the equation and look at the situation like this. You have great technology. You have everyone rushing into it.
You have a lot of debts. You are expected to see a price decrease. You have technology, you have competition between advanced types of AI, that is, those that are entering the public market. Anthropic, Open AI, maybe Open AI. But Anthropic, by the way, we might see S3, or S1, whatever it's called, sorry.
S1. on Friday. I heard they submitted a confidential application in early June. Yes, but we will get it, we will get the real one. But the implementation is also high, Charlie. Adoption is high, but it was also high with the Internet. And you know, it indicates that Wall Street needs to sell all these IPOs.
This points to another thing I want to say. There is a reason why short sales are necessary. The markets are full of beggars. They are advertising it and they will continue to do so . There is a conflict of interest when they advertise because they are pumping stocks in which they have a financial interest or a financial interest in underwriting.
And listen, this AI thing could go on for a while. I don't know. I mean, the internet bubble looked like it was about to burst. I remember because I'm old. In January 2000, I remember interviewing Henry Blodgett and saying, "Oh my God, this is crazy." He was one of the biggest skeptics at the time. He got into trouble because of this .
I think this is a joke. Yes, but, but let me finish. Let me...And, by the way, after the internet history, right? Um, with Henry Blodgett, the markets recovered, then everything exploded, and then Henry Blodgett eventually "exploded" as a technical analyst. My point is that I never predict lows. I never tell people about maximums.
I never advise people when to sell. I can only say that sooner or later it will come to pass, because it has to. And, by the way, that's good. Do you know why? This is how markets self-correct. I read your article in the New York Post and I wanted more from you because I don't think it's your best work, it sounded too disturbing.
Well, no one cares about your opinion. Well, I don't care what you think either. Do you know why they care what I think? Because traders call me and say, "Thank you for making this public." These are people you know, like Michael Bury. So let me say, these are people who have made billions of dollars and are saying that this was a much-needed warning.
Look, I want to explain why, because I respect you and I believe there is sound reasoning and research behind this. What I wanted from you was more context on the debt data, right? You say that the main message is that there is too much debt. By the way, there is such a thing as Open AI. If you type "debt" into Open AI, you'll find all these below-the-belt hits, or you'll listen to what I'm saying.
You just said my article is crap. I didn't say she was [ __ ]. I said I wanted more because I like most of your stuff. I want you to know: I can give more, my friend. I'm trying to do it. You said you wanted to know about debt? I'm telling you, there's such a thing as Google. Good. Google it. Good. OK.
There's this thing called Google, friends. Just google it and you will find out. There is data that contradicts what you said. I just don't like that I'm literally cooling this passion. No, not that. I like that you do this. I want you to add more context because I think this is an important discussion.
Or context about what? Need more context about the connection to the dot-com bubble? just be a little simpler, after all these years I just want to make one point. Debt was the main topic of your article. You advised people to lock in profits. I'm not arguing with you . record the profit. I said, maybe.
You said I should start, maybe I should. Think about it. That wasn't specific enough. I think, I think. I think you should be brave , wait, and we'll see how things unfold. Yes. Here's what I'll say. Pay attention to CDS prices, because I think you hit the mark. Debt will be the first signal of danger.
It takes off 5 times for hyperscalers. This is worrying, but debt is not what it was in the dot-com days, and this is where I wanted more data. We were in many, many ...By the way, many dot-com companies did not have huge debts. Well , maybe. Telecom had 80% excessive costs. Who had most of the expenses now?
Telecommunications operators. Telecom. We're talking about dotcoms. to get David. Good. Continue. I mean, Global Crossing. I tried, I tried, I mean, Global Crossing had a lot of debt. Wait. Wait. I just want to explain more simply how I understand it. I'm not as smart as those two guys, but nothing grows without obstacles.
Nothing. You mentioned, you mentioned the dot-com bubble. I'll go back even further to technology , because I'm older than you. I will return to the technological explosion that occurred in the early 1980s. And it started in the late 1970s under a very Democratic administration with hyperinflation and everything else.
This happened at a terrible time, not a time that was favorable for the business community, as it has been for the past 2 years . But remember, Steve Jobs, the brilliant Steve Jobs, was fired from Apple in 1980, or what year? In 1985? I think it was 1985 . Released. He had a conflict with Scully. It was a real battle.
He lost, Scully won, but Scully turned out to be not such a good manager. He returned after 12 years, Steve Jobs returned. He invented the iPhone, which changed everything. So even during the so- called continuous era of the technological revolution of the 1980s, we had these jolts, pauses, rethinking of what we were doing, and of course the repositioning of the products that came as a result.
Remember, the Mac failed in the 1980s. This is one of the reasons why Steve Jobs was fired, because he really failed. Then he came back with all these new ideas. So, I think we will have to wait for these "push- pull" processes for some time. AI is with us for a long time. There is no doubt that AI is here for the long haul.
However, as Charlie pointed out, there is no doubt that traders and investors sometimes get ahead of themselves. This has obviously happened, and the bond market is reacting as a result , and the situation will eventually calm down, but it won't be painless. And this is one of those moments. Last week was one of those pauses that could renew this week, but we could face a more serious pause when we see a pullback of more than 10%—something so terrible that people will think it's the end of the world for AI.
But I don't think that's the case. I believe AI is with us for a long time. That's good. Yes, sometimes you have to burn the bushes . So, I want to hear from our leader. I'll quote Charlie because I really liked that in your article. You said we are in a new paradigm. The code word for this era was irrational enthusiasm, when emotions, not metrics, drove stock valuations.
And I think it's this excitement that has pushed the ratings we talked about yesterday to levels that, frankly, have lost meaning to me . I said that this correction is useful, but I believe that there is still room to go down to make it healthier so that P/E ratios become logical in relation to the value of the shares.
The music will stop someday. We've seen this party before. I won't be the one trying to guess when the dancing will end and who will run out of chairs, but we know it will happen. We know that product standardization will occur. We know that this market will become saturated at some point. I don't think we're there yet.
As for Jamie Dimon, even if he is now repeating Trump's words to please the administration, I will say that I agree with him today because he himself said: as long as consumers have jobs and the labor market is healthy, they will continue to spend, and consumer spending will support the economy. I think we're moving at a pretty good pace right now, but that doesn't mean there isn't— after all, we know how the cycle works.
Something is definitely coming, and just think how far these markets have come, over 20% in the last 2 years. This can't last forever, even if you have AI and a growth engine. We agree, and let me just expand on what you said. I think you're talking about P/E ratios. P/E ratios have decreased. In fact, we are in a " bear" market in terms of valuations, so I think it's important to mention that.
You say, " Hey, the grades might be inadequate." If so, then it's not about the price. It's really about profits, and I think that's something we can question. We're talking about you having to show a return on investment . So, I think these are the things you want to explain, and Charlie, I liked that.
I'm just saying I wanted more specifics. Wait. I wanted more specifics because I think it's worth considering both sides, because you raised the alarm, which I think is appropriate. You have to look at the levels. You should look at Let me ask you this: What do you think about acknowledging this with Charlie, because one of the things that you, Charlie, have the ability to do very well is just give us the other side of the argument, and I think it's important for investors to understand how to balance that.
I know that, but my point is that when you say P/Es have gone down, what exactly are the P/Es? If you look at the S&P 500, if you look, if I look at the big tech stocks right now, you 're trading at forward P/E ratios that we saw after the dot-com crash with the major leaders. The problem is that this market is dominated by a few names, right?
Because most of Nvidia's stock, for example, I believe, was 23 times to 15 times. Yes, it has decreased significantly. A little. Micron is down a bit. That's why I say there's still room for it to become healthier. They are still expensive. Maybe, but we are not at such heights. If you look back to the dot-com days, you saw Cisco trading above 80 times.
Of course I remember that, but I'm just saying we're not...we're still a little crazy, but not to the point of madness. And I think the point of my story is, and I could go into more depth here, there's a certain line between cutting-edge models and open source models. Open source models are quite cheap.
I was at Goldman Sachs the other day. I asked, "Mr. Goldman Sachs, what do you use internally?" Sachs. Okay, and Mr. Goldman Sachs told me that internally they use all the leading models. They have it, you know, if you search for AI on the Goldman Sachs platform, as an employee, Claude or whatever will appear there , you know.
Big models , right? I asked, “What about the future?” For example, after you hold an IPO, because you are a bookrunner on this IPO.” Uh, I can't comment on that. Yes. This means they can move to big open source businesses that are cheap and free. Now think about it. This is price pressure on top of debt and overvalued assets.
I don't think they do that. They are not picky yet. Maybe later. This is a reduction in administrative costs thanks to open source. Anything that will help reduce costs. And he's right, Lou, that if there's margin compression or pricing pressure and debt continues to rise , at some point they're going to collide.
I completely agree. I completely agree. Anthropic is coming to market with an insane valuation. This doesn't make sense. Lou, can you take a look at SpaceX for us? there are two other companies, right? We're talking about big IPOs and advertising. SpaceX is set to release its first earnings report as a public company.
Of course, there are many indicators worth paying attention to. The most important thing for me is what will be the annual income from regular payments? It should reach about a hundred billion dollars. And most importantly, what about Starlink? Although it is a space company, the majority of their revenue actually comes from Starlink.
And I'm sure shareholders will be curious to see if Elon Musk says anything about his plans to become a mobile operator after the recent spectrum acquisition. Charlie, what do you think about SpaceX? Hmm, I don't know. I kind of like it. I mean, you know, that's the thing. Overrated or underrated? Well, it's higher, it's higher...
It's at the IPO price now , right? It's lower than it should be... It opened a hundred and fifty. What was, what she achieved that day . Um, I think what's brilliant about Elon is that he pushed this first. Mhm. Yes. You know, he's smart enough to sense that, and that's what I like about him. He felt a bubble.
He wouldn't say that, would he ? But he felt her, he understood it. Now the other guys are just picking up the leftovers, and they desperately need Wall Street to inflate it, and that's what we're seeing now. And yes, I think there is still room for growth in AI. I mean, the Nasdaq isn't going to collapse tomorrow, and I'm not urging people to sell right now.
I'm saying the market will correct. All this will be corrected someday. Yes, I agree. Don't forget to like and subscribe to the latest Fox Business news on YouTube, and watch full episodes on Fox 1.
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