Why the AI Bubble Hasn’t Popped — ft. Josh Brown - Prof G Markets Recap

Podcast: Prof G Markets

Published: 2026-01-09

Duration: 48 minutes

Guests: Josh Brown

Summary

Josh Brown discusses why the AI market remains robust, defying expectations of a bubble burst, and emphasizes the importance of market corrections for young investors. He also outlines expected earnings growth across sectors in 2026.

What Happened

Josh Brown, co-founder and CEO of Ritholtz, argues that the AI market is not experiencing the bubble burst many anticipated. He notes that semiconductor stocks, a key component of the AI industry, have maintained strong performance, with 86% of names in the SMH semiconductor ETF above their 50-day moving average.

Brown highlights the significant role AI played in driving profit margins to record levels in 2025, a trend he expects to continue into 2026. The technology sector is projected to achieve a 29.7% earnings growth in 2026, reflecting the continued integration of AI solutions across industries.

The conversation touches on the impressive performance of Google's stock, which rose 65% in the past year, making it the best performer among the Mag 7. This surge is tied to Google's strategic investments in AI and its robust distribution network through platforms like Search, Android, and Gmail.

Brown expresses confidence in the overall market outlook, projecting an 8.6% earnings growth for the S&P in Q4 2025 compared to the previous year. He underscores that sectors like industrials and consumer discretionary are also set to see substantial earnings growth in 2026.

Young investors are advised to embrace market corrections rather than fear them. Brown argues that corrections offer opportunities to accumulate shares at discounted prices, which can lead to significant long-term gains.

Despite concerns about interest rates and deficit spending, Brown believes these factors will have a muted impact on the market in 2026. He sees high interest rates as a form of stimulus for the top 20% of income earners, while the Federal Reserve's focus on maintaining liquidity through short-term repo markets remains crucial.

Brown emphasizes the irreversible behavioral changes prompted by AI adoption, with companies increasingly relying on AI for efficiency and fraud prevention. He predicts that the S&P 493 stocks, excluding the Mag 7, will continue to benefit from AI investments.

Key Insights