The AI trade may be fueling a stock-market bubble, warns Sevens Report Research’s Tom Essaye. Semiconductor stocks’ performance lags, raising concerns about the AI-driven market rally. Bubbles tend to form late-cycle, Essaye says, with the US economic outlook weakening. Is the AI trade driving a stock-market bubble? Earnings are strong, but warning signs exist. Meme stocks surge, sentiment high. AI excitement inflates market valuations, reminiscent of past bubbles. Tom Essaye, Sevens Report founder, discusses the AI narrative and semiconductor stocks’ impact on the market. Semiconductor Index (SOX) performance compared to S&P 500 raises concerns for Essaye. AI narrative fuels market rally, but SOX lagging could indicate trouble ahead. Economic outlook weakening, poor job gains, and rising jobless claims raise recession fears. Stretched valuations leave equity market vulnerable to downside, says Essaye. Keep tabs on economic data for market resilience.

Read more at Yahoo Finance: Strategist warns a crucial AI-stock index is sending a potential bubble signal