Investors today face a striking dilemma. The S&P500, once the epitome of broad diversification, is now dominated by a small number of AI tech giants. Their share prices have risen so much that the index has almost become a mirror image of a handful of expensive companies. The risk of that is clear: if one of those giants stumbles, the whole market feels the blow. In contrast is the largest cryptocurrency.

Despite fluctuations, it offers momentum that is less dependent on a single cluster of companies.

Whereas the S&P500 floats on overconcentrated and pricey expectations, crypto actually seems to promise more room for new capital flows and growth. For those looking ahead, that's a compelling argument.

$VOO (+0.04%)
$VUSA (+0.09%)
$BTC (-0.31%)
$XRP (-0.25%)
$ETH (-1.09%)
$SOL (-0.7%)
$MSTR (-4.57%)
$BMNR (-4.78%)
$MARA (-6.25%)
$IBIT
$IB1T (-3.45%)
$ETHA

The possibility that we are currently in an AI bubble is real. As with previous hypes, the valuation of AI companies seems to be ahead of their actual profitability. Moreover, the S&P 500 is heavily overconcentrated in a handful of large tech players that are benefiting from the AI hype. Should these fall, the entire index will be pulled down with them.

That risk is compounded by the fact that the S&P has become historically expensive, with P/E ratios well above average. The risks are clear: if promised growth fails to materialize, valuations could collapse hard. The situation is reminiscent of the dot.com bubble of the early 2000s, but with an important difference: now, a lot of credit is being borrowed to finance AI growth. That makes a blow more dangerous, because debt puts extra pressure in a downturn.

Conclusion: AI could change the world permanently, but current valuations seem fragile. A bubble need not mean AI disappears, it does mean investors should prepare for sharp corrections.

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$SNOW (+0.29%)
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$MDB (-0.02%)
$AI (+0%)
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New US-EU trade deal worth $1.35 trillion

At a summit in Scotland, Donald Trump and Ursula von der Leyen reached a major trade deal. The US lowers its threatened import tariffs from 30% to 15% on almost all European exports. In return, the EU will invest $750 billion in U.S. energy and $600 billion in broader economic cooperation, including defense. Higher tariffs of up to 50% also remain in place on steel and aluminum. The deal avoids a trade war and marks a new chapter in transatlantic relations. $VOO (+0.04%)
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