AI is 'bailing out' most of the U.S. stock market, Josh Brown says

CNBC

3 days ago

Concentrated tech strength is powering a market that is otherwise flashing signs of falling consumer health, according to Josh Brown, CEO of Ritholtz Wealth Management. Concerns around the market are mounting as artificial intelligence-related capex spending and strong corporate earnings — notably from Meta and Microsoft reports this week — fuel record gains for just a few mega-cap tech companies, while the rest of the S & P 500 is posting lackluster returns. "The top five market cap stocks now, all AI, spoiler alert, I think they're equal to the market cap of the bottom 430 S & P 500 names. That's absurd — and the problem is it was absurd when they were equal to the bottom half of the S & P 500," Brown said Thursday on CNBC's " Halftime Report ." By market cap, Nvidia is the largest company in the broad-market index worth about $4.37 trillion. Microsoft earlier Thursday joined the exclusive $4 trillion club on the back of its better-than-expected earnings report, but later climbed down to roughly $3.97 trillion. Apple, Amazon and Google parent Alphabet are the following largest names in the S & P 500, according to their respective market cap sizes. As these stocks continue to get a pop, Brown called out a dangerous shift in investor focus toward AI and away from stocks considered as "bellwether" indicators of U.S. economic and consumer health. "Nobody seems to care. Chipotle is a falling knife. Nike's been horrible. Starbucks, horrible. And these are companies where when they used to report, we would be like, ooh, the health of the consumer. Forget it. No cares," Brown said. "They keep going lower, and AI keeps bailing out the rest of the stock market." "Some of the other companies that we used to see as bellwethers are doing very poorly ... we're not paying attention to that because we're so focused on this," he said, referring to AI. He recalled the dotcom bubble in the late 1990s when traders overlooked bright spots in the market that were not related to the Internet. "It's not that there aren't opportunities. It's a game where you say to yourself, but other investors aren't going to come and buy this stock for me higher 'cause they only want to buy one thing. It's not healthy. We get to that point," Brown said. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC" TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.