FX168 Financial News Agency (North America) reported that as a strong rally in Wall Street technology stocks drove the S&P 500 index to a new all-time high near 6,900 points on Friday, market strategist Gareth Soloway warned in an interview with Kitco News that the market “may have just formed a significant top.”
Surging Led by Tech Giants, S&P 500 Valuation Hits a Decade High
The current rally has been primarily driven by a few tech giants, which now account for over one-third of the total market capitalization of the S&P 500. Amazon surged after reporting that its AWS cloud business growth returned to 20%, while NVIDIA became the first company in history to surpass a market value of $5 trillion, further fueling market sentiment.
Boosted by this, the S&P 500’s forward 12-month price-to-earnings ratio (P/E) has risen to 22.9, significantly higher than the 10-year average of 18.6. However, Soloway pointed out that these are not signs of strength but rather indications of a potential peak. He stated bluntly: “These key milestones often mark the emergence of a market top.”
Bubble Illusion Amid AI Frenzy: Soloway Points to ‘2000 Revisited’
Soloway believes that despite record-high profits from tech giants, the market is already showing typical “signs of overextension,” and the current AI-driven rally more closely resembles a “mania” akin to the dot-com bubble of 2000.
He noted that while today’s tech leaders like NVIDIA are indeed generating real profits – the company’s latest earnings report showed revenue soaring 94% year-over-year – it is “fair to say that Cisco was also profitable in 2000.”
Soloway particularly emphasized the current valuation risks: “In 2000, Cisco’s market cap was equivalent to 3.9% of U.S. GDP; today, NVIDIA’s market cap equals 16% of U.S. GDP. Is that normal? It looks more like a bubble.”
He added that retail investors are in a state of euphoria, while institutional investors have begun to exit. “Giants like BlackRock are taking advantage of the market rally to sell their holdings. They know what’s coming next.”
“K-Shaped Economy” Tears Apart Recovery: The Rich Get Richer, Middle Class Under Pressure
Soloway’s bearish stance is supported by macroeconomic data — the disconnect between asset prices and the condition of ordinary consumers is becoming increasingly apparent. He described this as a classic ‘K-shaped recovery.’
Data shows that asset holders and high-income groups in the U.S. have benefited from market gains, while middle- and low-income households are under mounting pressure. Total credit card debt nationwide has surged to a record high of $1.33 trillion, with the average annualized interest rate on credit cards rising to 22.83%. Meanwhile, real wage growth is slowing. The Minneapolis Fed noted that the slowdown in wage growth in 2025 is particularly pronounced among low-wage workers, with real wage growth falling from 3.9% to just 1.5%.
Consumer spending has also shown signs of divergence. Early 2025 data indicates a 7% decline in luxury spending, while discount-oriented retailers are expected to significantly outperform the broader market. Soloway pointed out that this trend is already reflected in corporate earnings reports, noting that ‘even Chipotle has stated that some customers can no longer afford to eat at Chipotle.’
Bitcoin Sends Risk Signal; Gold May Present ‘Ideal Entry Point’
In this economic landscape, Soloway views Bitcoin as a ‘leading indicator’ of a potential correction in the stock market.
He said, ‘It is very concerning when the Nasdaq continues to hit new highs, but a high-risk asset like Bitcoin fails to show significant strength.’ He cautioned that Bitcoin peaked four to six weeks ahead of the stock market in both 2017 and 2021. ‘I am concerned that Bitcoin is once again signaling us this time,’ he added.
By contrast, he believes the recent pullback in gold has created a rare buying opportunity. Soloway stated that gold, after retreating from its peak of $4,300, is approaching an ideal buying range, specifying entry levels and long-term price targets. ‘If gold falls back to the $3,500–$3,600 range, I will begin aggressively building positions,’ he said. ‘By 2026, we could see gold rise to $5,000 per ounce.’
Conclusion: A Mix of Exuberance and Warning Signs as the Market May Be on the Eve of a Turning Point
Amid the fervor surrounding AI concepts, unprecedented surges in tech giants’ market valuations, and sustained increases in U.S. stock valuations, Wall Street finds itself in a high-stakes gamble driven by ‘technology and greed.’ Soloway’s warning serves as a reminder that beneath the surface of exuberance, signals of cyclical reversal may be lurking.
He concluded, ‘The hallmark of a bubble is not that no one sees the risks, but that everyone believes this time is different.’
