EPISODE SUMMARY

Podcast: Prof G Markets
Episode: Why the AI Bubble Hasn’t Popped — ft. Josh Brown
Date: January 9, 2026
Host: Ed Elson (Scott Galloway absent this episode)
Guest: Josh Brown, Co-Founder & CEO of Ritholtz Wealth Management

EPISODE OVERVIEW

This episode dives into whether the much-hyped AI bubble in financial markets is real, why it hasn’t popped, and what to expect for markets in 2026. Ed Elson interviews Josh Brown, focusing on the recent market dynamics, the resilience of tech and AI-related stocks, how to interpret “bubble” fears, investment advice for young professionals, and broader predictions for the new year. The conversation is candid, packed with real-world perspective and engaging market analysis in the classic “no mercy, no malice” Prof G style.

KEY DISCUSSION POINTS & INSIGHTS

1. Reflections on 2025 & AI Bubble Narrative

• Staying the Course During Negative Headlines

  • Josh recounts how Oracle's troubles in November 2025 fueled fears of an AI bubble about to burst, with many calling it "dot-com 2.0".

  • He distinguishes between two groups:

    • Those naturally anxious and prone to negativity.
    • Those who “wishcast” for an AI crash out of self-interest or missed opportunities.

  • Quote:

    “It’s really tough to… stay the course and stick to your guns. But that really was the key to the fourth quarter.” (Josh Brown, 05:14)

  • Markets (Dow, NASDAQ) have powered to new highs, suggesting the so-called bubble hasn’t popped.

  • The story: Prices are more trustworthy than loud opinions, and many pessimists are driven by their own interests or desire for market drama.

2. Why the Bubble Hasn’t Popped

• Valuation & Price Action Above Narratives

  • “Prices are more important than opinions,” says Josh. Despite doomsayers, major semiconductor and AI-adjacent stocks didn’t crash—they quickly recovered.

  • Quote:

    “Pay less attention to what people say and more attention to what they do.” (Josh Brown, 10:34)

  • Much market “bubble talk” is attention-seeking or has ulterior motives—content creators seeking engagement, or fund managers out of position.

• Divide AI-Related Companies into Two Buckets

  • Public: Stocks like NVDA, Broadcom, Corning, can be tracked and traded.

  • Private: Companies like OpenAI, Anthropic—hidden but influential “MacGuffins” with no daily price discovery, so proxies like Oracle often used.

  • Quote:

    “One of the most important chess pieces is not on the board… OpenAI share price is not tradable.” (Josh Brown, 11:52)

  • AI narratives shift quickly—Alphabet went from doomed to AI leader in months.

3. 2026 Market Outlook & Predictions

• Focus on Earnings Growth, Not Crystal Balls

  • Josh rejects making “price targets”, favoring risk rationalization and understanding data and context.

  • “Will fundamentals continue to justify an above-average P/E multiple?” is the key question.

  • Consensus: Big earnings growth in tech and semiconductors; S&P earnings expected to grow ~15% for 2026.

  • Despite some systemic risks (“exogenous shocks”), the forecast is positive if trends hold.

  • Quote:

    “If you think the market delivers that, 21 times earnings is justifiable.” (Josh Brown, 21:25)

  • Risks like AI data center pullback are possible, but not the base-case assumption.

4. AI Spending & Real-World ROI

• ROI Focus for Data Center & Chip Investment

  • The question is “Are we going to see a real return on those investments in the consumer economy?”
  • Key barometers: Palantir, Amazon, Alphabet (not just chipmakers, but the platforms serving corporate AI needs).

• AI’s Penetration in Real Economy

  • AI has already produced irreversible behavioral change—embedded in everyday workflows, especially for “knowledge workers.”
  • Example: No coder works without a copilot; AI is pervasive within Google’s suite, etc.
  • Quote:

    “There’s already been a behavioral transformation that cannot be reversed.” (Josh Brown, 31:48)

• Innovations as Multipliers

  • Nvidia’s rapid development of off-the-shelf autonomous driving for OEMs: “Eight years of Tesla experimentation in one year.”
  • Metaphor of dreams not keeping up with the pace of real announcements.

5. Risks & Catalysts Beyond AI

• Interest Rates

  • Fed is no longer the “queen on the chessboard,” more like a “bishop at best” this year.
  • Rate cuts/raises seen as less impactful due to broad macro stability and ongoing liquidity.

• Deficit Spending

  • Additional fiscal support/infrastructure could help earnings, but risk is potential inflation.
  • Inflation, while on the radar, is moderating and not currently inhibiting investment.

• Profit Margins for Non-MAG7 Stocks

  • A “big story” for 2026 will be “S&P 493” (non-MAG7) companies leveraging AI to expand profit margins.

NOTABLE QUOTES & MEMORABLE MOMENTS

• On Wishcasting and Financial Media:

  • “There are a lot of people who have a vested interest in seeing this thing go badly and maybe it will. But ... who’s actually invested? Who literally has money on the line, reputation on the line?... My God, I need a counterbalance to all the Chicken Littles and all the people saying the end is nigh.” (Josh Brown, 09:15)

• On Price vs. Narrative:

  • “When in doubt, follow price.” (Josh Brown, 10:24)

• On the Unique Role of AI Companies:

  • "It's a very unique situation where one of the most important chess pieces is not on the board." (Josh Brown, 11:52)

• On Fed Policy in 2026:

  • “There are years in which the Fed is the queen ... this year, the Fed is a bishop at best.” (Josh Brown, 36:59)

• On Young Investors:

  • “If you’re in your 20s and 30s, stop rooting for record highs, root for corrections, root for lost decades, because that makes you a lot more money over the preponderance of your investing career.” (Josh Brown, 45:45)

• On Real-World AI Impact:

  • “I think there’s already been a behavioral transformation that cannot be reversed ... it’s become ingrained behaviorally already.” (Josh Brown, 31:48 & 33:22)

• Career Advice:

  • “Figure out how to solve the problems of wealthy people ... make yourself indispensable to large corporations, small business owners, people with means, people who are willing to give you money to make their problems go away. You will have lifetime employment.” (Josh Brown, 46:39)

IMPORTANT SEGMENTS/TIMESTAMPS

• [03:56] - Why news cycle negativity didn’t derail the market rally
• [06:28] - Bubble debate: Stock prices, wishcasting, and reality checks
• [11:52] - The uniqueness of AI’s private market “MacGuffin” (OpenAI, Anthropic)
• [18:53] - 2026 Market outlook: Why fundamentals matter most
• [25:22] - How to spot ROI in AI; why Palantir, Amazon, and Alphabet are the tell
• [31:48] - The irreversible transformation to AI adoption
• [36:13] - What will drive markets beyond AI: Profit margins and S&P493
• [36:59] - Why the Fed matters less in 2026
• [38:39] - On deficit spending and inflation risk
• [42:56] - Investment advice for young people: “Root for corrections”
• [46:39] - Career advice: Make yourself indispensable to people with money

CONCLUSION

Josh Brown advances a bullish yet sober thesis: The AI “bubble” hasn’t popped because behavior and market action point to real adoption, not just hype. Investors are rewarded for tuning out noise and following prices, with tech fundamentals and profit growth expected to prevail in 2026. For the next generation, the surest path is to stay invested, hope for volatility, and solve the real problems of those with capital.

“It’s a very exciting time to be an investor, not to lose your head.” (Josh Brown, 28:16)