How Much Longer Can AI Carry the Market? ft. Christian Mueller-Glissmann | U Got Options | Ep.13

Mueller-Glissmann says AI’s earnings impact depends on adoption and monetization: AI subscriptions and token use are only 0.1% of S&P 500 cost of goods sold, and gains may take time to appear in broader productivity measures. He says cloud indicators are beginning to show monetization, but the upcoming Q3 earnings season will test whether companies can turn AI capex into revenue as capex-driven earnings tailwinds peak and application-stage revenue remains uncertain.

Mueller-Glissmann argues that the AI capex boom has accelerated nominal growth and pushed the business cycle toward a midcycle acceleration, alongside significant private-sector releveraging. The host cautions that recent earnings gains may also reflect an AI-capex “sugar rush” and lower tax rates, while Mueller-Glissmann says moderating earnings tailwinds, rate headwinds, and the bond selloff have contributed to equity consolidation.

Mueller-Glissmann sees risks in AI-linked earnings without equating them to a repeat of the late-1990s valuation bubble: the S&P 500’s forward P/E fell from 23 to 19, while current hyperscalers have more diversified businesses and return on equity is more than double its late-1990s level. He says AI investment has boosted semiconductor and other beneficiary earnings, but those earnings can be cyclical; long data-center and compute contracts offer more visibility, and he considers an earnings bubble more likely than a valuation bubble.

Mueller-Glissmann identifies the Middle East war and rising energy prices as a major inflation driver, while describing the bond backdrop as less favorable because of higher and more volatile inflation, fiscal concerns, and reduced central-bank flexibility. He says debt rollovers and new borrowing add funding pressure, and that the recent yield rise exceeded a historical indigestion threshold—more than two standard deviations over three months around 5.1%–5.2%; the host also notes that inflation can raise discount rates and compress margins.

The speakers describe a market feedback loop in which rising markets support capex and earnings, but warn that it can reverse when markets fall; the guest says a sharp equity correction could hurt households and the economy, with a central-bank response offering some buffer but not necessarily stabilizing events once underway. Mueller-Glissmann also says U.S. household equity holdings are at a record share of wealth, exceeding levels during the tech bubble and COVID recovery.