Is A Stock Market Crash Imminent? Bubble Warnings Grow Louder

From meme stock rallies and sky-high call options to trillion-dollar tech valuations, signs of a new stock market bubble are flashing across Wall Street—and this time, the warnings are coming from nearly every corner of the financial world.

• NVDA stock has already rallied 30% this year: Check live chart here.

In a week packed with red flags, experts from Goldman Sachs, Bank of America, Yardeni Research, Apollo and JPMorgan have all pointed to levels of speculative activity, policy easing and market concentration that closely resemble the lead-up to past financial manias.

Goldman Sachs: Speculation Near Historic Extremes

Goldman Sachs analyst Ben Snider reported Friday that the firm’s Speculative Trading Indicator is now at its highest level outside of the 1999-2001 and 2020-2021 bubbles.

The surge is driven by an explosion in trading volumes for unprofitable stocks, penny stocks, and high-multiple tech names, alongside a 50% rally in a basket of retail trader favorites since April.

Goldman also flagged an extreme short squeeze in the most shorted stocks, with gains of over 60% in three months, a spike exceeded only by the blow-off tops of the dot-com and meme-stock eras.

“Speculative trading activity has also accompanied one of the sharpest short squeezes on record, another dynamic reminiscent of both 2000 and 2021,” Snider said.

Adding to the frenzy, call options now account for 61% of all options activity, the highest since 2021, while IPOs and SPAC issuance are roaring back—with $9 billion in SPAC capital raised in second quarter alone, the strongest quarter since early 2022.

Bank of America: Bigger Retail, Bigger Bubble

Michael Hartnett, chief strategist at Bank of America, highlighted a parallel trend: policy-driven bubbles fueled by deregulation and monetary easing.

He highlighted a global shift toward looser monetary policy, with the world policy rate falling from 4.8% to 4.4% over the past year, and expected to drop to 3.9% in the next 12 months.

Meanwhile, President Donald Trump's administration is working to finalize an executive order allowing private equity into 401(k) s, while regulators are exploring easing day trading rules for retail investors by slashing margin requirements from $25,000 to $2,000.

Hartnett said these changes could lead to “bigger retail, bigger liquidity, bigger volatility, bigger bubble.”

AI Bubble Surpassing 1999 Tech Peak?

Apollo's chief economist Torsten Sløk issued one of the starkest warnings, saying today's AI-driven bubble has eclipsed the tech bubble of the 1990s.

He noted that P/E ratios for the top 10 S&P 500 companies, many of them in AI—like Nvidia Corp. NVDA and Meta Platforms Inc. META—are now higher than during the peak of the dot-com era.

"Almost 40% of the S&P 500 is concentrated in just 10 stocks," Sløk said. "If I buy the S&P 500 today, I'm really just betting on the AI story continuing."

J.P. Morgan, in a July 22 research note, was more direct.

They flagged excessive investor interest in high-volatility stocks as a "red flag for the broader market" and cited the S&P 500's forward P/E of 26—well above its historical average of 18—as a potential setup for disappointment if growth cools.

Yardeni: A Slow-Motion Melt-Up,

Veteran market strategist Ed Yardeni is less concerned about a crash but agrees the market is riding a wave of exuberance.

“It’s a slow-motion melt-up," Yardeni said Thursday on CNBC.

According to Ed Yardeni, the risk of a recession—and the bear market that would likely follow—remains low, thanks to resilient consumer health supported by baby boomer wealth, solid household spending, and growing confidence in President Trump's recent trade deals.

"People of my generation have $80 trillion in net worth," Yardeni said. "They’re retiring and spending. And their portfolios are rising, so they're happy."

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