This post was originally shared in my DT Email Newsletter here.
It has just been a non-stop AI rally. I expect more of the same.
And that’s the bad news.
From my recent observations across forums, social media, online discussions, it’s no doubt the AI story is back big time.
I mean, take a look at semiconductors, which were up 150% over the past year. This was despite the Iran War ceasefire.
Even Intel shares are going ballistic…
Just because Mr. Market thinks Intel has some “renewed relevance” in the AI infrastructure market, with its cheap AI accelerators expected to have a higher performance at a lower cost compared to industry leaders like Nvidia.
Of course, we can’t forget OpenAI.
In Feb 2026, OpenAI hit a record US$25 billion in annualized revenue. That’s a 17% growth in annualized revenue at the end of 2025. What’s more, OpenAI is targeting ~US$600 billion of compute spending by 2030.
Earlier this year, OpenAI raised US$122 billion. Let’s put some numbers in context: NASA’s annual budget is ~US$24 billion. With a massive burn rate of US$4 billion per month, OpenAI will burn through NASA’s budget in just half a year.
Now, OpenAI is still a company that produces ~US$2 billion in revenue and burns money for every query it processes.
At some point, it needs to go back to investors or do an IPO before it runs out of cash. I suspect at some point, the intelligent investors will ultimately demand the most important thing: can the company actually make a single dollar of profits.
This also goes to many loss-making AI companies today.
You can argue whether we are at peak AI.
But I can tell you, at 40x PE ratio this market is not exactly cheap…
Sure, this momentum could keep on going for a while. But who knows when this cycle will exactly change?
I can’t predict the market. But there are 3 things I’m doing right now.
First, the most logical way for most of us is to limit or even reduce exposure to tech stocks. Think about this, 35% of the S&P 500 Index is now in tech stocks. The last time this happened was in the late 1990s.
Second, when the cycle changes, I expect traditional, high-quality boring companies will do well. Pick them now.
Take a look at Johnson & Johnson shares, which have steadily outperformed tech stocks through the entire dot-com crash…
So much for Mr. Market being “efficient”.
Third, this is why I’ve stopped buying the S&P 500 ETF for my son.
Now if you ask me, what truly matters is when investors start demanding profits from these AI start-ups.
I know this sounds cliche, but the best offense today is having the best defense. And the ultimate wealth defense is still buying for dividends.
Why?
Whether the market is moving up, or it’s getting hammered, you still collect a dividend paycheck year after year. To me, that’s the move I’m making today.
What do you think of Mr. Market today? Hit reply to let me know your thoughts 🙂
Sometimes, investing can be simple.
Willie Keng, CFA
Founder, Dividend Titan
Love the J&J chart, Willie — the dot-com outperformance you showed is exactly why I keep coming back to boring dividend names when valuations get stretched like this. 40x Shiller PE is sobering. The “best offense is the best defense” framing landed at exactly the right time for me. Looking forward to your next one.