The S&P 500 continues to gather steam, pushing past 6,700 for the first time, with a nearly 14% price increase, driven by AI euphoria and soft-landing optimism on Wall Street.
However, market concentration has hit record highs, as the index sits at all-time highs.
The top 10 stocks currently commandroughly 38.7% of the S&P 500’s value, the heaviest weighting recorded in its rich history.
At the top of the heap, we have Nvidia, Microsoft, Apple, Amazon, and Meta, which powered the lion’s share of 2025’s rally, with just four AI-powered giants responsible for over 50% of this year’s gains.
This setup clearly points to a soaring index that’s balanced on just a handful of names, which is precisely where seasoned voices tend to step in.
Few have earned that right more than Gary Shilling, a Stanford-trained economist and former Merrill Lynch chief strategist with a penchant for spotting trouble before it strikes.
His pertinent Insightnewsletter has been a Wall Street mainstay for decades, often cited by outlets like Bloombergand The Wall Street Journalfor its data-driven contrarianism.
That said, the man who was among the first to call out the 2008 housing crash and championed Treasuries long before they became fashionable has just dropped a new warning, one that cuts straight through the AI buzz and market frenzy.
Gary Shilling sees “tremendous speculation” and a potential 30% stock market slide
Veteran economist Gary Shilling just poured cold water on Wall Street’s euphoria.
In a new interview, the legendary stock market watcher said that today’s rally sits on “tremendous speculation,” the kind that usually doesn’t end quietly.
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Shilling’s math, which is simple, not doomsday, indicates that a usual post-World War II bear market clips away the S&P 500 by about 30%. From where the index currently stands, which is near 6,700, that would result in a slide of nearly 4,700.
“These are not the guts of the economy,” he said of AI-linked winners and crypto. “These are the flourishes.” He states the market’s hottest trades, including AI megacaps to speculative crypto plays, look less like fundamentals and more like late-cycle fuel.
Moreover, even Bank of America’s equity strategy team is getting uneasy.
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In a midweek note, strategist Savita Subramanian said that 60% of bear-market indicators are flashing, which is just shy of the 70% threshold that precedes major peaks.
Additionally, the team warned that multiple valuation gauges have eclipsed dot-com-era highs, an obvious sign, they say, that markets have evolved from “frothy” to “bubbly.”
Quick takeaways:
- Gary Shilling warns stocks could potentially drop about 30%.
- Bank of America feels 60% of its bear-market indicators are flashing.
- Shilling’s concern isn’t about recession, but is based more on an “air pocket” between story-stock valuations and real cash-flow strength.
Wall Street’s latest S&P 500 calls have been higher, but bumpier
Wall Street’s playbook for the past couple of months has been “up, but earn it.”
Most analysts still view new highs powered by AI and easing policy, but they’re getting a lot more vocal about valuation, narrow breadth, and pullback risk.
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Consensus has crept higher since September, with earnings results holding up while the Fed’s tone softened. However, tacticians warn that late-year choppiness is most likely, and any potential Big Tech wobble may hit the tape outsized.
What analysts are saying about Big Tech, market
- Goldman Sachs: 6,800 year-end 2025, on the back of a dovish Fed and resilient profits.
- Barclays: 6,450 for 2025 (and 7,000 for 2026), upgraded with the bullish run.
- JPMorgan: 7,000 by early 2026, spearheaded by capex and AI, along with a nearer-term year-end view closer to 6,000 earlier this year.
- Morgan Stanley (Mike Wilson): 6,500 target with 10% to 15% pullback risk in the near term if macro/geopolitics bite.
