Why the AI Bubble Hasn’t Popped — ft. Josh Brown

Summary

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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

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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.

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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.

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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)

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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

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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)

Transcript

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[Josh Brown]

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[Josh Brown]

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[Ed (Interviewer)]

Slack business plus today's number 54. That is the percentage of men who have some form of facial hair, up from 42% ten years ago. According to surveys, most men don't actually like their beard at first, but then it grows on them. Okay.

[Josh Brown]

Oh, I was supposed to. Oh, my God.

[Ed (Interviewer)]

No, no. If you don't find it funny, then that. That's just what we do.

[Josh Brown]

So I did. But it was a delay. It was a delayed reaction. I did find it funny. Listen to me. Markets are bigger than us. What you have here is a structural.

[Version History Host]

Change in the world.

[Ed (Interviewer)]

Distribution cash is trash.

[Guest Speaker / Author]

Stocks look pretty attractive.

[Josh Brown]

Something's going to break. Forget about it.

[Ed (Interviewer)]

Welcome to Profg Markets. Scott is still on vacation, but we are back in action and we are kicking off the year with the one and only Josh Brown, co founder and CEO of Ritholtz. Josh, welcome back to the show. It's great to see you.

[Josh Brown]

Great to see you. I apologize for dressing like the great and powerful Oz. I didn't pick up on it until I saw myself on a video screen. That's. That's what I'm. That's the energy I came into the year with.

[Ed (Interviewer)]

I love it. You're looking good. How is your. How is your holiday? Holiday? How was your new year?

[Josh Brown]

So sick.

[Ed (Interviewer)]

Oh, yeah.

[Josh Brown]

So great. I. You know what? I've been in Florida for two weeks. I have a tan. You look good. The weather sucks here, predictably. But, like, it's not even bothering me. I just. I had an amazing couple of weeks for the holidays, and I feel Good. Ready for 26.

[Ed (Interviewer)]

Ready to rumble? Ready for 20. 26. Okay, well, let's get right into it. A lot of questions I want to ask you. Uh, we haven't had you on since the summer, and a lot has happened since then. We had the government shut down. We had rate cuts. We had this AI bubble story which kind of got huge. A lot of people were talking about it. Um, just as you look back on 2025 and what's happened since we last spoke, just a pretty general question. What have been your biggest takeaways?

[Josh Brown]

I think the key thing was not getting too negative in November when Oracle was blowing up. And it seemed like this was going to be like this. This comeuppance for all the data center spend, and all of a sudden, like, the floor was about to fall out from under all of us. And, like, if you fell prey to that narrative, which obviously a lot of people says two categories. There are people that fell prey to it because they are just nervous by nature, or they. They tend to fall for all of those types of, like, bouts of negativity. But then there's another camp of people that really did want it to fall apart. They wanted it to crash. And, you know, some of that is, like, political. Some of that is people who missed out on. On the AI trade for the last three years. But, like, whatever. You just had this huge chorus of people warning you, like, this is the next year 2000, and it's.com 2.0. But I think the key to this year was not falling prey to it. And if you were able to stay the course, like we're talking right now, the Dow is going to have its first close, I think today above 49,000. And the NASDAQ looks incredible through the end of last year and now into the first week of this year. And I think it's really, it's tough sometimes when everyone is screaming bubble, bubble, bubbles. It's really tough to like, you know, stay the course and stick to your guns. But that, that really was the key to the, to the fourth quarter.

[Ed (Interviewer)]

Which part of those bubble fears do you take issue with? Cause, you know, you know, we were talking about it a lot on this podcast and there were several moments which I think were substantial and they were legitimately concerning. I think the biggest one was probably what we saw on Brad Gerstner's podcast where they asked Sam Altman about the revenue and the amount that they're going to spend, the fact they want to spend one and a half trillion dollars, they've got $13 billion in revenue. And then we saw kind of the worst response we've ever seen from a CEO, the CEO of a company on which a lot of the momentum in the market really depends on. So, you know, we weren't saying it was doomsday on this podcast. We were trying to be rational about it, but it was something that we were worried about or that we thought was at least significant, I guess. From your view, which part of the bubble story was wrong or misguided?

[Josh Brown]

Well, no, we still may end up having a bubble. But I look at price, I look at valuation, I look at all the things that classically you're supposed to look at. And the stock market just was not going along with the story that this is all coming to an end. If you looked at the way semiconductor stocks were acting, they just, they were not giving into that narrative. And if you like, I. So I'm one of the people that comes on the show with you and you know, my big, my big thing that I try to get across when I can, what I'm trying to convey is that prices are more important than opinions. And prices represent the sum total of, of people who actually manage money and are voting with their money. So again, I think there's a lot of wish casting. A lot of people want to see OpenAI in the private market somehow like burst into flames. A lot of people want to see Larry Ellison and Oracle have a, have a come up. And it's like a lot of that, that's wishcasting is people saying they think that's going to happen, but what they're really saying is I want this to happen. And if you were looking away from Oracle CDS prices, which I don't think are particularly important, but if you were looking at actual share prices for Nvidia and Broadcom And Corning, which makes the fiber optics for all the data centers. And you were looking at, you know, you definitely saw stocks come down, but you did not see stocks plunging, stocks crashing. That's not how the real money was betting. And here we are just a couple of weeks out of that and most of those stocks have recovered. The SMH looks amazing. I think 86% of the names in the SMH semiconductor ETF are above their 50 day moving average. That didn't take long. So I think it's really important when you hear people pounding on, you know, with a, with a wooden spoon on a pan, talking about bubble, ask yourself, why are they doing it? Are they in the content business? Okay, they're doing it for attention, they're doing it for clicks. I get that. That's, there's nothing wrong with that. Everyone's going to make a living. Are they money managers who are overweight, small cap value, underweight tech? Okay, I get that too. They're wishcasting. They want these stocks to blow up so they can call their clients and say, you see, I was right, I'm not a schmuck, I told you so. So there's a lot of that going on. Obviously people on financial television, it's high ratings when stocks like Oracle blow up and then the next one and the next. They want that domino effect because this is when people are paying the maximum amount of attention to financial media. So there are a lot of people who have a vested interest in seeing this thing go badly and maybe it will. But I think it becomes really important to say, all right, who's talking about this? That's actually invested. Who's talking about this that literally has money on the line, reputation on the line, that has skin in the game. I want to listen to those people. Not that they can't be wrong, but my God, I need a counterbalance to all the Chicken Littles and all the people saying the end is nigh. Because without that counterbalance, you're just listening to people who are wishcasting.

[Ed (Interviewer)]

What I would say in pushback is, you know, you're describing a dynamic where there are certain people who have a vested interest in things going down. But on the flip side, there's also people who have a vested interest in things going up.

[Josh Brown]

Yes.

[Ed (Interviewer)]

And everyone has vested interests. Everyone has things that they want or internal biases. They want things to go right. Maybe they want things to go wrong. And I think to your point, it is so important to figure out how to kind of weed through that.

[Josh Brown]

My point is when in doubt, follow price.

[Ed (Interviewer)]

When in doubt, trust what the markets are saying about the price of a stock.

[Josh Brown]

Pay less attention to what people say and more attention to what they do.

[Ed (Interviewer)]

Fair enough. I think that's Definitely true on OpenAI as an example. So I feel like we need to kind of bucket these companies into. Into two buckets, basically.

[Josh Brown]

Totally true.

[Ed (Interviewer)]

Where you do have many of these AI related stocks, which I think are growing pretty healthily and they're managing their balance sheets well and everything looks pretty good. And then I think there are other companies like OpenAI, which I honestly, I mean, maybe I'm one of those wooden spoon banging against the drum, but I don't look at what OpenAI is doing from a financial management perspective and it. I don't think it inspires much confidence in me personally. And the trouble is I can't follow the price because it's private. So I actually don't know what the price of OpenAI is. But if I had to guess, based on what we're seeing in the public markets, I would probably look at Oracle as a proxy for what's going on with OpenAI and it's not looking very good. So in that sense, OpenAI doesn't seem to be the best reflection of what is happening in AI right now. I have so much other stuff I want to ask you, but I am just interested in this topic. Would you agree that we need to divide it up?

[Josh Brown]

I think you're exactly right. It's a very unique situation where one of the most important chess pieces is not on the board. It's highly, highly unique situation. I've likened it in other venues. I've explained it as Keyser Soze in.

[Ed (Interviewer)]

The Usual Suspects, Sam Altman limping off.

[Josh Brown]

It's the main character in the movie. It's the thing that animates the actions of everyone else in the movie and he doesn't show up until the last one minute of the film. In old Hollywood, they used to call it the MacGuffin. So the Maltese Falcon. What is the Maltese Falcon? It's a stupid statue, but it's the MacGuffin. It's the thing that sets everything else in the Movie in motion. OpenAI share price is not tradable. Now, of course, there are people who are invested in it, but even if they on a Monday, they're bullish, on a Tuesday, they're bearish. They don't have the liquidity to change their mind and act on that price in the way that we have in the public market. To which I would respond to you, I'd say you're exactly right. Thank God for public markets, number one. Because yes, there is a lot of concern about OpenAI and we saw it viscerally in the prices of the companies that were deemed to be, quote, OpenAI dependent companies, that OpenAI is spending the most money on their services. And Oracle sort of became like an avatar for that. But let me ask you a question. Anthropic, one of the biggest players in AI, also private, spends about $5 billion annually that we know of on the cloud to support its business. Anthropic is actually ahead of OpenAI in enterprise. They're selling to thousands of the largest organizations and corporations around the world. We don't have a share price for that one either. You think, you think Anthropic is in as big of a drawdown from its high as as the public share price of Oracle is probably not. Amazon actually consolidates some of the the profit from Anthropic is doing. As a very large shareholder of the company, we think that that business is gangbusters. So yes, you have to bucket these things. But then you also have to realize narratives in AI are shifting overnight. Seven months ago, the talk around Alphabet is that they're finished, they're done. They're gonna get murdered by OpenAI and other LLMs. People are gonna start their searches on Perplexity and Claude and ChatGPT and completely bypass the Google experience. And then Google goes up 65% on the year, becomes the best performing of the MAG7 and all of a sudden it's Google's world and the rest of us live in it. That shift didn't take three years, it took like three months. So the narratives and the banging on pots and pans has to give way to the primacy of price. What are people actually betting on with real money versus who is wishcasting and just hoping the guy they don't like goes down for the count, right? Oh, I don't trust Sam or I hate Elon or. It's so important to focus on price more than ever, not to try to sit here and parse 50 different people's opinions. That game is almost impossible. The real game is, okay, fine, but what are the buyers doing? What are the sellers doing?

[Ed (Interviewer)]

We'll be right back after the break. And if you're enjoying the show so far, be sure to give Prof. G Markets a follow wherever you get your podcasts.

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[Ed (Interviewer)]

We're back with property markets. Based on everything you've you've told us here and what you've seen in 2025, let's look ahead to 2026. We've been having a lot of different commentators on telling us their predictions for the year. We've gotten kind of a range of opinions. What are your predictions for markets this year? Are you bullish on 2026? Are you bearish and why?

[Josh Brown]

So we're money managers, not sell side analysts and not chief strategists. So we don't have price targets. We don't have our own internal earnings expectation. What we do for clients is we rationalize the risks they're taking with data. We try to give them the historical context that we think is more important than the prediction of the month or of the day these days because we're in January where everyone's making their year end predictions. But this is what I would share with you. The only questions that matter for this year. Number one, will the fundamentals continue to justify an above average price earnings multiple? That's it. That's the question. You either answer that yes, no, maybe, or let's say yes, no, I don't know. So of course, like obviously I don't know, but I think the answer is yes. Why do I think the answer is yes? Well, the first earnings season we'll have is Q4. We'll start getting these reports in February and here are the consensus estimates. You tell me what you think when I'm done. Wall street thinks the S and P will deliver an 8.6% earnings growth quarter versus Q4 of 2024. Okay. They think the technology sector, which is obviously the most important sector for earnings growth and also for market capitalization, will do 25.8% earnings growth. That's an eye popping number. If they do 24% or 27% or anywhere in that vicinity, wouldn't you agree that that would support a 21 multiple on the overall S and P given how important those companies are to market cap? That's what I would say. You're not getting that across the whole S and P. You're getting that in tech. And a lot of that's coming from semiconductors. Okay, fine. But the number is the number. We don't put asterisks on any other year for the s and P500. Why would we all of a sudden put an asterisk now? Here are the full year 2026 consensus estimates for sectors, the big sectors that matter. Wall street thinks industrials will do 13.1% earnings growth. They think technology would do 29.7. 30% earn, not revenue. Earnings growth for 26 again, if they even get close. But here's what's really fascinating. Financials, 10.4% for 2026. Consumer discretionary, huge sector. Amazon's in that sector. Tesla for some reason is in that sector. 11.7%. Communication services, that's Alphabet, Meta, Netflix, et cetera, 7.2%. So, like if healthcare, 8.5. Utilities, 8.7. That's become a de facto AI trade. So the consensus thinks the S&P 500 will grow earnings once again for all of calendar 2026 by 14.6%. So with a typical beat rate, it'll probably be more like 15, 16%. If you think the market delivers that, 21 times earnings is justifiable. And so it doesn't mean we'll get another, you know, 18, 20% return on the S and P. But at the very least, we should have a lot of winners in the market. 16 stocks in the S and P doubled last year. These aren't obscure, bizarre stocks no one's ever heard of. Some very big stocks doubled last year. All sorts of stocks went up 30, 40, 50, 60%. And I want you to remember the stock market wasn't cheap a year ago at this time. So the earnings growth has to deliver. So the real question that we need to answer is, will it? Yes, I think it will. And there's a chance that that's wrong. You could have some sort of an exogenous shock that changes everything. So you have to just be like, okay with that. That's the risk that we're all taking. Because just for fun, go read the January 2020 year ahead outlooks from Wall Street. How many of them were talking about coronavirus? Zero. Hundreds of outlooks. Zero. And that obviously changed everything. Stock market ended up going up, by the way. But I'm just making the point, like the thing that could alter the course of 15% earnings growth this year is not really the thing that any of us could put our finger on. Now a lot of people would say, oh, it's going to be the AI data centers, they're going to slow down. There's going to be another Oracle, blah, blah, blah. Okay, possible. But right now that's just not. I wouldn't say that's sort of like what should be anyone's base case that all of A sudden, all this money that these companies have spent, they're going to say, you know what, Forget it. It's just unlikely to me. So that's where I am on 26.

[Ed (Interviewer)]

I think that makes a lot of sense and I appreciate, I think it's a really good framework. Let's just focus on the fundamentals. Are the fundamentals going to grow in 2026? And a lot of indicators would say, yes, they will, beyond just the numbers itself, itself that Wall street is projecting. But the fact that we do have interest rates coming down, the fact that we're going to see more deficit spending. Having said that, on the AI front, I think one of the questions that I'm thinking about and that a lot of people are think is we've seen all of this unbelievable spending. And as you say it, it is mostly coming from the semiconductor industry. That's sort of where the action is happening and that's what's kind of driving growth at this point. But I think the question then becomes, will we see the ROI on those chip and data center investments? Like, is it the case that all of the money that Meta is spending on the data centers and that Alphabet spending on the data centers, all the money that they're spending on these chips, are we going to see that reflected? Are they going to get a real return on their investment in the what I would say the real economy, which is the consumer economy. And for that, we kind of have to look at companies like Anthropic, we have to look at companies like OpenAI and we have to figure out how much are people actually willing to spend for this stuff.

[Josh Brown]

Palantir is your tell. Okay? Amazon is your tell. Alphabet. This is where the spending is literally happening. Corporations are not buying GPUs. Amazon and, and right, like Amazon, Alphabet, Microsoft are buying GPUs, Meta. And why are they buying them? Because their customers want to be able to do more with their data. And that's how that, that works. So you watch the data centers. I think, I think everyone is. So that's not like a big revelation. You watch the Palantirs, the Accentures, you listen to their commentary. Those are the companies that are actually assisting large enterprises with like, okay, great, AI, AI, AI. What do I actually do with it? How, like, how does it help me beat earnings, you know, next quarter? Well, here is a project that you could work on right now. So like that's, that's where the rubber meets the road, is in that part of the market. Look, I think you look at the performance in Sectors that have nothing to do with AI over the last year and you've seen like different sectors waking up. Biotech had an unbelievable comeback in 2025. What has materially changed in biotech? Nothing other than the use of AI is probably a huge efficiency driver in phase 1, 2 and 3 clinical trials. It probably speeds up a lot of the things that have slowed those companies down in the drug discovery realm. That's the way Wall street is starting to price in the AI opportunity in healthcare. Look at the financials, same thing. Fraud detection, cybersecurity, like AI becomes a force multiplier and things that they're already spending money on if they could spend money more efficiently. And the last thing, and I know we're going to get to this, but at cbs, Nvidia was able to show that they have done in one year what took Tesla eight years to automate an automobile so that it could drive through the city of San Francisco without a human touching any of the steering wheel. Gear shift, brake acceleration. Again, that's eight years of Tesla experimenting on the road. Nvidia has an off the shelf solution for every OEM in the world to turn their automobiles with a few sensors and a software package and a chip package into an autonomous car. You know, Nvidia works with Volvo, Mercedes Benz, gm, Toyota, Jaguar, Land Rover, all of them are going to have access to minimum level 2 autonomous driving via Nvidia. They'll be able to catch up to Tesla like within a year, 18 months. Now you think about, you say, what's the ROI? Are you fucking kidding me? The ROI for these types of projects and we're not even getting into robots, which is probably a late 2020th story. Like robots as like an ROI driver is probably 27, 28, 29. But like that is what the street is pricing in when it says it's willing to pay 22 times for the top 500 companies in the United States. That's the mentality right now. It's not what's the roi, it's oh my God, I can't even imagine how big the ROI could be. It's all moving so fast. My dreams can't even keep up with the things that they're announcing. So it's a very exciting time to be an investor, not to lose your head. It'd be a different if I said to you the S and P is 45 times earnings, like it's the year 2000. All right, it's a different conversation. But that's not what's going on right now. I wish it were. It'd be more fun to talk about. It'd be a slam dunk bubble. We could all be short and get rich. It's just not that easy.

[Ed (Interviewer)]

Yeah. I think the other piece of it is the timing of all of this. It's sort of like what is our timeframe for when we're going to see that roi? And what are Wall Street's expectations for when that is all gonna come through? And I think that kind of defines whether we see an implosion, whether we see a correction or some sort of crash or we don't. I'm with you. The ROI is going to show up at some point in some way, and it'll be in a very big way. Would you.

[Josh Brown]

Right now, here's a thought exercise. I take away your LLM usage from your day. You're not a corporation, you're not a government, you're an individual. I say to you, no LLM for the next 30 days. What's your experience like relative to what you've just spent the last two years doing? It sucks. You're not going to stop paying for it. And then if I say, okay, you could have it back, but the only way you could have it back is you have to pay three times more than you were paying.

[Ed (Interviewer)]

That's the question. I'm not sure, I'm not sure that's what I want to know.

[Josh Brown]

Oh, I'm fairly sure if I took it away from you for 30 days and then said, all right, you could have it back. But Chad, GPT plus is no longer 20, it's 40 or it's 60. You're probably paying it.

[Ed (Interviewer)]

I think I probably am. I think. But that to me is the big question. It's like, and that's what the. I guess as a sort of naturally maybe risk averse person, which is not a good thing, by the way. It's way better to be risk on risky. It's a better strategy in general. But I guess my point is, and what I, what I want to know is what is that price?

[Josh Brown]

Right.

[Ed (Interviewer)]

And I want to see it in the numbers, like what are people actually willing to pay? What is this thing really worth? And can we see that happening? And I guess my response, I just, I don't quite know. And that's why I feel, and I think probably others feel a little bit more hesitation this year is that we don't fully know yet. We kind of are getting a sense, we're beginning to get a sense, we're beginning to see the ROI begin to get reflected in the numbers, but we haven't fully realized it.

[Josh Brown]

I think there's already been a behavioral transformation that cannot be reversed. And I think that most knowledge economy workers have already very heavily incorporated AI tools into their daily workflows in ways that they might not even be aware that they've done because of the ways in which Alphabet has sort of inserted this stuff into all the services that we already use. There's AI all over Gmail, There's AI all over Docs and Drive. And I just. And then you think about, like, for people that are heavily working in tech, doing things like coding. No one's coding without a copilot at this point. So I think there's been a behavioral change that's irreversible, and I think that that grounds this AI spending story, at least in something. There's like a baseline.

[Ed (Interviewer)]

Yes.

[Josh Brown]

Okay. So that's really. That's important. And Ed, you could not have said that in 1999. You could not have said that because nobody was actually making money on the Internet.

[Ed (Interviewer)]

Right?

[Josh Brown]

And it's funny, the first use case where people actually were willing to surrender a credit card number to any Internet company was the purchase of online pornography. Like, pornography is probably the thing that got AOL to profitability. Like, honestly, it's that. It's, it's, it's the thing that made the Internet like, a going concern. It was the only revenue.

[Ed (Interviewer)]

It's what's gonna get OpenAI to profitability, Right?

[Josh Brown]

Perhaps. But I, I think this is very different from that. I think this is, like, it's already proliferated through corporate America and, and then just regular people in the way that they look for information. Like, my wife and her friends take pictures of Things and ask ChatGPT, how much does this cost? Or does this look like I should take my son to the doctor or. Right. Like, it's just. It's become. It's become ingrained behaviorally already. So we need to stop thinking about this as something that's about to abruptly end. And then I think you're asking the right question. It's like, okay, but what is it really worth? I don't know that there's one answer that makes sense for everybody, but I agree. It's the right question.

[Ed (Interviewer)]

We'll be right back. And for even more markets content, Sign up for our [e-mail] Subscribe.

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For most of the history of television, if you missed a show, you just missed it. It was over. It was gone. But then this little company called TiVo came along and gave people superpowers. You could pause live television, you could rewind it, you could save it and watch it later. It was incredible. And the people who had it could not stop talking about it. This week on Version History, a new chat show about old technology. We talk about the history of TiVo and how it is that a company whose products actually no one ever really had or used became one of the most iconic stories in tech. All that on Version History. Wherever you get podcasts this week on.

[Guest Speaker / Author]

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[Ed (Interviewer)]

We're back with property markets. AI was a huge narrative driver in 2025. Based on this conversation, we're thinking about what's going to happen in 2026. I think it's probably going to be a huge driver of the narrative in 2026 as well. What else are you thinking about going into 2026 aside from AI? What are the big stories? What are the biggest shifts that are going to really drive the market this year?

[Josh Brown]

Well, it's profit margins, and we had record levels of profit margins this year, and I think we'll do it again next year. And that is mostly an AI story. So I hate to, like, recursively keep coming back. I think that's really it. It's so big, dude. It's so. It's so big.

[Ed (Interviewer)]

Yes.

[Josh Brown]

The most incredible thing for next year is to see The S&P493 stocks, not the MAG7, start beating earnings and crediting all these AI investments they're making. That's it. Like, that's the whole. That's the whole ball game. And I think that's what we're going to get.

[Ed (Interviewer)]

What about interest rates? Are you focused on what we're going to see from the Federal Reserve? I mean, obviously Trump's going to pick his new Fed chair in May. Does that matter to you?

[Josh Brown]

Not really. There are years in which the Fed is the queen on the chessboard. I think the Fed this year is a bishop at best. I don't think anywhere near as impactful. If we get one interest rate or three interest rates, I'm not sure that that materially means a whole hell of a lot. One of the things we've learned over the last couple of years, which I know you and I have discussed, is that high interest rates actually served as a form of stimulus for the top 20% of the country. People's bank accounts were gushing income in ways that they hadn't experienced in 15 years. There's just no evidence that what the system needs right now is a lot of rate cuts. There's also no evidence for any reason why we should expect to see rate hikes. So I think there will be a transition at the Fed. I don't think it'll be fire and brimstone. I don't think the new guy walks in with a mandate from the White House to take weights to zero. I just, I think the most interesting thing happening at the Fed right now is what they're doing with very short term repo markets just, you know, doing their best to maintain liquidity. Maybe that sort of becomes a story if we have a liquidity air pocket. But outside of that, I would not have the Fed on my bingo card as being a particularly notable player in what's to come this year.

[Ed (Interviewer)]

What about deficit spending? We've got the big beautiful bill, which is kind of going to go into effect this year. It's going to add nearly half a trillion dollars in some form of fiscal support. I assume that's just going to show up in earnings. Are you thinking about that? Do you think that will be a significant driver this year in markets as well?

[Josh Brown]

No, I think the deficit is just something that you put on your list of risks to the market every year. If you're a chief strategist or a chief economist, you just like second automatic. It's almost like putting China Invades Taiwan. Like it's just like one of those, like, just pencil it in.

[Ed (Interviewer)]

Well, I. Sorry. I mean, in a positive sense that this is just more money. We're just injecting more money into the system. And so perhaps it will be a good thing.

[Josh Brown]

The risk there is, it's inflationary, but the prevailing trend right now in the stuff that really matters, and my colleague Callie Cox, who's actually out of the Picture on maternity leave recently. But like the big, like her big concept that she tries to get across to people, our investors is just like, look, there are blips in inflation for individual items, but the prevailing trend is lower, less exacerbated issues in the labor markets, lower wage growth, lower commodity prices. Filled up my car this morning, you know, a three handle for premium gasoline. Rents are coming in, home prices are moderating. We do have. It's not at the speed the Fed would have liked, but we do have moderating inflation. All that stimulus that you reference, all of that spending, all the infrastructure. Is there a risk there that all of a sudden the inflation picture moderates at a slower pace or starts to scare people to the upside? Sure, it's definitely something that we can worry about. I wouldn't use that as a reason to not invest. You know, it's. It's on the list. Low on the list, but it's on the list.

[Ed (Interviewer)]

Josh Brown sounds very bullish, is what.

[Josh Brown]

I would say, but I always am. It's not it.

[Ed (Interviewer)]

You always are. And I think, I think. I mean, it seems as though your view going into 2026 is kind of stay the course, more of the same, which is exactly what you kind of told us last year. And that's exactly how you were rewarded for it. I mean, we had a great year.

[Josh Brown]

I'd love to show up and say we're at a turning point. I know. I mean, the content came also, but I'm doing. I'm doing this a long time. I've been bullish forever. My clients have been rewarded for that. There are bear markets along the way. 2022 was not fun. We did our jobs as wealth managers in 2022. We had massive stocks like Meta and Amazon in 50, 70% drawdowns. That does happen. It's part of the experience of investing. Our approach is not to try to predict those moments. It's to help people get through them. Because what's on the other side is even higher prices, even more profitability, even better outcomes for people who are willing to bear risk. This is what we do. And I think we're the best in the world at it. We are not the best in the world at calling turning points like that. I can't get. I wish I could. I can't deliver that for you.

[Ed (Interviewer)]

What would be your advice to young investors right now? I mean, and I. I would just couch this in the fact that we've had, for example, Asvath Demodoran, who we had on our podcast earlier this or earlier this year, last year, towards the end of last year. And it was one of the most strikingly bearish pods we've recorded where he was very, I mean, and this is not a person who loves to sound the alarm on stuff. I mean, he is a very calm, composed, measured investor. He tells everyone what he's doing and you can track his investments on his website. But he said that he is looking at selling and getting into collectibles because he thinks that everything is, is overvalued. Now. I don't know where he stands on things right now. This was, this was, you know, some time ago. But just given what everything we're seeing, all the, all the opinions out there, what would be your advice to investors, especially young investors going into 2026 right now? How should you think about investing?

[Josh Brown]

Do not get into collectibles. Aswath is brilliant. He's the dean of valuation, they call him, I understand he's, he's looking at present valuations and he's looking historically and he's. It's accurate. When you buy at high valuations, prospective returns are lower. It's like an iron law of finance. The problem is we have seen a consistent ratcheting up of multiples over the last 10 years and companies have found ways to deliver higher than expected profits. And this could be yet another one of those years. So I think the, the key thing for young investors is to pray for downside in the stock market to remember that they are forced investors for savers. If you are your 20s or 30s, you have decades that you are forced to take a portion of your paycheck every two weeks and add it into a 401k if you know that today. Are you rooting for all time highs? Are you mad? Have you lost perspective on like time and space? You want lower prices if you're young. So I have clients in their 20s, I have clients in their 80s. My clients in their 80s want higher prices. No shit. They're cashing their investments out now and living off the money today. My clients in their 20s, we have conditioned them. Don't root for record highs, root for 20% corrections and then call me and tell me how you're going to get me more money into your account or I'll call you. So you must, if you're in your 20s and 30s, stop rooting for record highs. I know it feels good. I know it's endorphins. Look what a genius I am. I bought Tesla at 300. It's 340. Yeah, yeah, yeah. I get it, that's what you're rooting for, but you shouldn't be. What you really should be rooting for is a lost decade. A, it'll hurt your parents, so I know you'll, you'll get that Shade and Freud, but B, you will be accumulating shares in the greatest corporations known to mankind at discounted levels from where they once sold. And when you're buying low, eventually the market goes back to its old highs. You don't get back to even. You slingshot ahead of where you otherwise would have been. So if you're listening to this, you're a young investor. You're not an old rich man like Scott Galloway. 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, which is decades long. Mine is too. I am an older gentleman. I am a forced buyer of stocks. I'm 48 years old, if you could believe that. I can't touch my own 401k till I'm 65, 70 years old. I won't be withdrawing to my IRAs until the last minute. So I'm a buyer of stocks. All time highs are great for me. They make me look like a genius to my clients, but the reality is I'd rather buy low. So it's a mindset shift. It's not about predicting what's going to happen.

[Ed (Interviewer)]

Career advice going into 2026 for these young investors, these young professionals. You've had so much success in so many different arenas. I watch you on CNBC all the time, crushing it. I listen to your podcast. I love it. You're a great writer, you're a great investor. What would be your words of wisdom for young people, young working professionals heading into 2026? What should they be focused on?

[Josh Brown]

All right, so I've heard a lot of very people more accomplished than I am answer this question. I've heard people give commencement speeches. I've heard the professor, my opinion is figure out how to solve the problems of wealthy people. It's just kind of. And that could be as simple as, like, everyone mocks. Oh, you're an art history major. Good luck with all your student debt. Hey, moron, what do you think all these trillionaires are going to be doing with their money? They're going to be collecting priceless works of art and they have no taste. Do you see how Jeff Bezos celebrates his birthday on, on. On a yacht with people waving sparklers? They're philistines. That was amazing. They're. Imagine having $100 billion and that's how you celebrate your birthday on fucking Instagram, okay? Cater to wealthy people, solve their problems. 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. It's as simple as that.

[Ed (Interviewer)]

I love it. Josh Brown is the co founder and CEO of Ritholtz, a New York City based investment advisory firm managing six and a half billion dollars in assets for individuals, corporate retirement plans and found. And you can also check out his podcast the Compound and Friends for more. I highly recommend it, Josh. Next time we'll have to do this longer, but we'll let you go. Thank you so much.

[Josh Brown]

Always a pleasure, Ed. Wishing you guys all the best in 2026.

[Ed (Interviewer)]

You too. Thank you, sir. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our research team is Dan Shalon, Isabella Kinsel, Kristen o' Donoghue and Mia Silverio. Drew Burrows is our technical director and Catherine Dillon is our Executive producer. Thank you for listening to Prof. G Markets from Prof. G Media. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.

[Unknown / Possibly Outro Speaker]

You have me in kind. Reunion as the water.