Listen to the audio version of this article (generated by artificial intelligence).
Tom Young here with today Smart money.
When investors get excited, that excitement rarely stays confined to one corner of the market.
Money flows into a hot asset, early investors make fortunes, and suddenly everyone is looking for the next big winner. Optimism quickly spreads. Stocks rise, speculative bets multiply, and assets that seemed unrelated begin to move higher together.
That’s one of the reasons I care Bitcoin (Bitcoin-dollar). Over the years, cryptocurrency has served as a surprisingly useful barometer of investor enthusiasm. When speculative money starts flowing into Bitcoin, it often indicates that investors are becoming more willing to take risks elsewhere as well.
The problem is that investors are not always rational.
The fear of missing out (FOMO) can be stronger than the fear of losing money, and booms in one corner of the market often lead to rallies in other corners. As economist Charles B. Kindleberger in his 1978 classic Mania, panic, and crash“There is nothing more disturbing to one’s health and judgment than to see a friend become rich.”
We saw exactly this dynamic play out in 2024. Bitcoin more than doubled in value, eventually rising to over $122,000 before experiencing a rather ignominious sell-off in late 2025. But the story wasn’t just about Bitcoin. The increase in risk has helped fuel rallies across commodities, biotech, artificial intelligence and other speculative corners of the market.
Now, this pattern appears to be repeating itself.
We are seeing a new crop of AI companies – from SpaceX Technologies Inc. (Spex) to Smart Bird Company (bird)formerly Allbirds – stealing the headlines.
So on today Smart moneyLet’s take a look at how today’s AI boom is fueling a new wave of speculative enthusiasm across the market — and what that could mean for stocks in the coming months.
Next, I’ll share one stock with you to help you start organizing your portfolio safely and profitably.
Let’s jump in…
There is still room for this rally to continue, but not forever
First, there is a good chance that this bull market will continue until the end of the year.
Full-year S&P 500 earnings growth is expected to reach 23.3%, and US macroeconomic data is holding up well. America significantly outperforms other advanced economies in GDP growth, unemployment, and AI innovation. All else being equal, this kind of earnings growth provides room for stock prices to rise 20% to 25% as well.
We also know from history that US markets typically continue to rise for a year after reaching a new high. If historical averages hold, we are looking at a bull market that should last until at least late September – a year since the S&P 500 “tentatively started” to hit a new high.
However, I don’t think investors should approach this rally with the same optimism they had in 2024. FOMO spikes are usually focused on momentum, and the most common ones are now too expensive to buy safely.
One of the clearest examples of this is the dynamic random access memory (DRAM) market, which has historically been dominated by three companies:
- Micron Technology Company (in)
- SK Hynix Corporation (KRX: 0006600)
- Samsung Electronics Co., Ltd. (KRX: 005930).
The trio are now worth over $1 trillion each thanks to AI-driven demand for DRAM, and all three trade below 20x price-to-earnings (P/E) ratios because the “E” (their earnings) denominator is so overvalued.
However, the “Big Three” valuations assume that DRAM prices will remain in the stratosphere. It’s the same kind of optimism that sent memory stocks soaring 400% in 1995, 2000, and 2014.
Each time, investors believed that cyclical fluctuations in the industry were a thing of the past. And every time, they were completely wrong.
Is this time different?
Well, maybe. AI requires far more computing power than anything before it, and AI infrastructure must continue to be built until at least 2031.
Again, unusually high profits tend to attract new competitors.
We’re already seeing Chinese state-backed giants like ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC) stealing market share from Micron, SK Hynix, and Samsung. It’s not hard to imagine CXMT and YMTC becoming like the Chinese solar panel makers that drove American manufacturers out of business between 2012 and 2017.
Bottom line: This bull market may still have more to go, but many of the market’s most popular momentum trades no longer offer an attractive balance between risk and reward.
That’s why Eric became more selective. He has it Fry investment report service.
Here’s how he does it…
Your FOMO has been triggered — here’s what you can buy instead
The FOMO spike of 2024 has presented plenty of investment opportunities. Companies like Alphabet Company (Google) and Amazon.com Inc. (Amzn) Still enjoying a fundamental rally thanks to the “efficiency year” sell-off in 2022, commodity markets were still depressed due to the collapse of the Chinese housing market.
This time, investors need to look further afield for cheap momentum.
That is why I want to draw your attention to Coupang Company (CPNG)A Fry investment report Considering that Eric is a “strong buy.” Unlike many AI infrastructure plays, Coupang still combines reasonable valuations with solid earnings growth.
This South Korean e-commerce company has cheapness and momentum on its side. Net revenue is growing, with first-quarter earnings posting an 8% year-over-year increase.
Also in Fry investment reportEric recommends a Chinese electronics recycling company and an American battery company. Both have momentum and are relatively cheap. The former trades at just 7.5 times forward earnings, despite growing 25% annually and carrying no debt. The latter is riding a wave of demand for battery storage and is still trading below its 2021 IPO price despite rising 345% last year.
However, there will still be profits to be made as this bull market continues its course.
Because in a FOMO rally, the smartest investors aren’t the ones who ride it the longest; They’re the ones who know when “too much money chasing too few assets” finally ends.
Until next time,
Thomas Young, CFA
market analyst, Investor location
