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This is What “Always” Happens Before a Market Crash - Video học tiếng Anh
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This is What “Always” Happens Before a Market Crash
This is What “Always” Happens Before a Market Crash
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0:00
Right now, the elite are dumping their tech stocks,
0:02
and they are using your 401(k) as their exit ramp.
0:05
Wall Street told you that your retirement fund was secure in the future of AI.
0:09
That there’s nothing to worry about. It’s all a lie.
0:13
While you’re being fed that script, billionaires are cashing out of the digital dream,
0:17
leaving ordinary investors to hold the bag when the AI bubble pops.
0:21
And make no mistake… it will. Since early 2026, CNBC, Bloomberg,
0:26
The Motley Fool and others have consistently run headlines questioning the sustainability
0:30
of AI spending and warning of a fragile bubble. In particular, their focus has been on the risks
0:35
and volatility around the so-called Magnificent Seven: Apple, Microsoft, Nvidia, Amazon, Alphabet,
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Meta Platforms, and Tesla. It’s not surprising.
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The combined market capitalization of those companies exceeds $22 trillion.
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That’s larger than the nominal GDP of every nation on Earth except the U.S.
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Even compared to America, the financial footprint of the Magnificent Seven is roughly
0:58
70% of the nation’s $32.4 trillion GDP. And they’re not about to pump the brakes.
1:04
The percentage of overall U.S. GDP fueled by AI investment continues to soar.
1:09
One recent estimate suggests that if you include spending on software, hardware, R&D, and data
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centers, AI investment now accounts for more than 25% of U.S. GDP growth. Spending has reached $1.5
1:21
trillion a year. So, for every $4 of U.S. economic growth today, over $1 is from AI investment.
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The Magnificent 7 are responsible for over 90% of that.
1:33
Yet up until recently, the stampede of capital into these companies seemed like smart business.
1:38
These companies lead the field in critical areas like AI, high-end chips,
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cloud computing, and consumer devices. They’re powering the future. Their value can only rise.
1:47
So, it’s a no-brainer to invest heavily in them. That’s the logic that has seen huge amounts of
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money pour into these stocks. That drives their share prices – and valuations – ever higher.
1:57
Institutional capital piled in. Retail investors followed. The companies themselves have done their
2:03
bit with regular large-scale stock buybacks. The results have been incredible.
2:08
In 2023 and 2024, the Magnificent Seven delivered exceptional returns. But in
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2025 the cracks began to appear. By mid-2026 the smart money seems to have made its call:
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It’s time to head for the exits. The tech companies are continuing
2:22
to spend money like there’s no tomorrow to build out a highly profitable future. The Magnificent
2:27
Seven’s combined capital expenditure, or capex, is projected to reach between $725 billion
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and $750 billion in 2026. That’s almost double the $400 billion they injected in 2025.
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Everyday investors and pension funds are along for the ride, continuing to fill their bags with
2:45
Magnificent Seven stock. Consequently, the stock market continues to hover near record highs,
2:50
despite increasing volatility. But some of the biggest investors
2:53
on Earth are pulling back. They’re following the advice of the most famous investor of them all,
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Warren Buffett: “Be fearful when others are greedy, and greedy when others are fearful.”
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In other words, buy during market panics and sell during market euphoria.
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When it comes to tech stocks, the smartest money is increasingly going “risk off.” The
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billionaires are selling off their tech holdings and pivoting into traditional safe havens like
3:16
gold and real estate. Others are looking at the sectors left behind in the AI boom, and
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commodities that thrive during economic downturns. In 2026, investor Stanley Druckenmiller sold
3:26
every last share of Alphabet, a stake he had aggressively built up just one quarter earlier.
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He also cut the bulk of his Amazon common stock position, having previously completely exited
3:37
his positions in Meta, Nvidia, and Tesla. In their place, the billionaire rotated into
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the unglamorous hardware that the AI boom runs and biotech. He also appears to have
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bolstered his positions in gold and copper. David Tepper of Appaloosa Management is
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another who decided to opt out of tech stocks causing a few raised eyebrows.
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Having previously built up substantial positions in most of the Magnificent Seven,
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in 2026 Appaloosa reduced its Microsoft stake by 82%, its Nvidia stake by about
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13% and its Meta stake by about 27%. Like Druckenmiller, he’s also pivoted
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into non-AI tech and industrial heavyweights like Uber, Vistra Corp, and Chinese firm Baidu.
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And if you look at Buffett and Berkshire Hathaway, their current holdings hint that
4:21
something seismic is about to happen. As of Q1 2026, Berkshire holds a record
4:26
$397 billion in cash and short-term U.S. Treasury bills. That’s nearly triple its
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2022 level. It hammers home just how much selling the firm has been doing.
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It sold roughly 75% of its holdings in Apple and dumped large positions in Amazon in late
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2025/early 2026, reducing its exposure to the Magnificent Seven. You don’t sell off the most
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valuable stocks in the world to accumulate a pile of cash because you think prices are going up.
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Berkshire can see something looming on the horizon.
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And just like it did during the 2008 and 2020 crashes, Berkshire has positioned itself to snap
5:02
up bargains when the markets crash. As Buffett is reputed to have recently put it, “The most likely
5:07
time to buy is when nobody will answer their phones because the markets are collapsing.”
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That time hasn’t quite arrived, but Buffett and many others like him believe it’s coming.
5:17
Meanwhile, private equity, pension funds, and retail investors continue
5:20
flooding the space with money. Someone’s going to be wrong.
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And as their new worth shows, it’s usually not the billionaires.
5:28
In Q1 and Q2 2026, insiders at major tech firms including Nvidia, Amazon, and Meta
5:34
sold billions in stock. Stakes in AI-related companies like Rapid7 and Snap Inc. dropped by
5:40
50 to 77% as investors cashed out. Hedge funds have also reduced their positions.
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So, what exactly is it about the AI environment, and the Magnificent Seven, in particular that
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has the smart money running for the exits? It comes down to a number of connected risks.
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The most immediate of those is concern about the sustainability
5:58
of massive AI spending without the returns. In 2025, the Magnificent Seven spent hundreds
6:03
of billions on AI-related capital expenditures. They need to build out the infrastructure
6:08
necessary to deliver AI at a global scale. That will lead to staggering revenues and profits for
6:14
the companies and investors. At least, that’s the idea.
6:17
Right now, the tech giants are trapped. In Q1 of 2026, they pulled a massive $2.7 trillion to
6:23
$2.8 trillion. But they’re burning through that cash at a terrifying rate just to keep
6:28
the AI dream alive. Normally, a healthy tech company spends about 10 to 15% of its money
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on development and upgrades. The Magnificent 7 are spending approximately 26 to 27%.
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It’s a huge red flag. Expenditure is around four times
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as fast as growth. That’s created a massive black hole between what they spend and what they make.
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$600 billion to be precise. That’s enough money to build 400 Burj Khalifas from scratch.
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Management teams at the Magnificent Seven have argued that this is just temporary.
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They anticipate that the massive 2026 infrastructure build-out will unlock
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significant revenue streams in 2027 and 2028. AI software subscriptions to products like Copilot
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and Gemini, cloud compute rentals, and improved advertising will be the main drivers of revenue.
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But investors like Druckenmiller, Singer, and Buffett disagree.
7:19
The smart money sees through the hype. They know that dumping $750 billion into AI
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infrastructure is a gamble. And they’re terrified the Magnificent 7 won’t get that money back.
7:29
The biggest warning sign is flashing above the big 4: Amazon, Microsoft, Alphabet, and Meta.
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For decades, these companies were cash cows. They printed billions of dollars year after year.
7:40
They were the safest stocks on the market. But the AI arms race has turned that on its head.
7:45
In 2026, their combined spending is expected to consume nearly 100% of their operating cash flow.
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Maybe even more. Every single dollar made is immediately
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spent on chips and data centers. Amazon is projected to burn between $17 to $28 billion
8:00
in pure cash in 2026. Meta and Alphabet have seen their cash reserves plummet by 90% year-over-year.
8:07
Alphabet posted its first-ever negative cash flow quarter in mid-2026. Only Microsoft is in the
8:13
black, and that’s being generous. It’s scraping by thanks to accounting tricks and finance leases.
8:19
With their internal cash flows exhausted, Big Tech is increasingly turning to debt markets
8:23
and external financing to fund the build-out and keep the lights on. But borrowing billions puts a
8:29
chokehold on potential profits. The clock is ticking.
8:32
The revenue from AI needs to explode right now. But even if it does, there’s potentially
8:37
a bigger problem. Antitrust crackdowns.
8:39
Legal challenges pose an existential threat to the business models of several Magnificent 7,
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especially Alphabet, Apple, and Meta. Who in their right mind would pour hundreds of
8:48
billions of dollars into companies that might end up being ripped apart by the legal system?
8:53
The legal cases are far from trivial. The Department of Justice is actively trying
8:57
to tear Google apart. They’re not just issuing fines, they’re pushing to sell off Chrome or scrap
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Google's lucrative default search deal with Apple, which is worth roughly $20 billion each year.
9:08
Across the pond, Europe is also hitting the tech giants hard. In 2025 the European Commission
9:13
slapped Apple with a €500 million anti-compliance fine. Meta received a €200 million bill.
9:20
But it isn’t about the money. There’s a risk that this friction
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could force operational changes. It limits companies using one part of the business to
9:28
support another, driving up raising costs and reducing revenues in the process.
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For companies under pressure to deliver higher revenues while facing increased borrowing costs,
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that spells disaster. Strict enforcement would stop the big firms from snapping up emerging
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competitors or integrating services. Their domination could crumble.
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It’s not the kind of situation that has billionaires reaching for the checkbook.
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But even if they survive the regulators, there’s something else threatening their existence and
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has smart money spooked. Excessive concentration.
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The entire weight of the U.S. GDP growth rests on the shoulders of the Magnificent 7. This creates
10:03
a systemic risk, not just for the AI sector, but for the U.S. economy and global markets.
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AI investment drives around a quarter of U.S. GDP growth. Goldman Sachs warns that investment
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drops dramatically, it could trigger a recession. They could pull the global economy down with them.
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One of the main issues is the speed of the AI transition.
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Unlike housing booms that build and peak over years, the AI infrastructure cycle is exploding at
10:27
a rate of around 0.85 percentage points of GDP per year. And what comes up must come down. If this
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spending spree slows at the same rate as it grew, we’re heading straight off a financial cliff.
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Investments will vanish overnight. The impact would spread across global
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supply chains, notably to Taiwan and South Korea, while leaving the U.S. with stranded assets.
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But the effects of deteriorating Magnificent Seven don’t end there.
10:52
Because they’re borrowing billions to stay alive, they are crowding out the rest of the market.
10:58
There’s suddenly more competition for a limited supply of credit. So it’s becoming harder for
11:02
smaller companies to get the money they need to grow. Even if they do get it, it’s more expensive.
11:07
The situation gets even murkier. The entire industry is an illusion:
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circular financing. As of mid-2026,
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analysts estimate over $800 billion in a closed loop finance structure across the AI supply chain,
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with the Magnificent Seven and their partners at the center.
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Let’s say Nvidia buys a stake in a small startup and commits to provide billions for cloud servers.
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The startup then takes that cash and sends it straight back to Nvidia by purchasing chips.
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Nvidia’s sales look impressive, inflating their share price and the
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startup looks like the next big thing. The money keeps moving in circles…
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until it doesn’t. Everyone is doing it.
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Microsoft invested roughly $13 to $15 billion in OpenAI, largely structured as credits for the
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Azure cloud platform. OpenAI uses these credits and additional cash to pay Microsoft for compute.
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Microsoft then uses it to build infrastructure packed with Nvidia chips or Oracle servers.
12:04
To complete the loop, OpenAI has since signed $250 billion in cloud commitments with Microsoft
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and $300 billion with Oracle. A large portion of Microsoft’s reported AI revenue comes from OpenAI,
12:16
which is funded by Microsoft’s own capital. The biggest players are links in the same chain.
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But a chain is only as strong as its weakest link. It’s created a "single-point-of-failure"
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scenario not just for the U.S. economy but for equity markets around the globe.
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The value of the Magnificent 7 makes up nearly 37% of the S&P 500. That’s half as much as the
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other 493 companies combined. They dominate the market.
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When you buy a standard, secure index fund for your retirement, you think you’re spreading
12:46
your money across 500 companies. You’re not. You’re more than likely gambling
12:51
on the stocks of a handful of companies. A regulatory crackdown on AI or a supply
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chain disruption could obliterate returns for standard index funds.
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We’ve already had a glimpse of this in mid-2026, when geopolitical shocks caused the Magnificent 7
13:04
to lose $2.3 trillion in value in a single month. When the AI bubble bursts, the impact could wipe
13:10
out trillions in household wealth, severely affecting consumer confidence and spending.
13:15
Your 401(k) is being held hostage. Most pension schemes automatically
13:19
track major indexes like S&P 500 or Nasdaq-100. So, because the Magnificent Seven make up such
13:26
a massive portion of these indices, pension funds are structurally forced to buy them.
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The management of these schemes are probably aware of the risks, but they can’t just sell
13:34
off and move to cash like Warren Buffett. If they did, they’d probably face a number of lawsuits.
13:40
Wall Street knows this. Data from July 2026 shows hedge funds are dumping tech stock at
13:44
the fastest pace on record. They are locking in profits while valuations remain high while your
13:50
401(k) absorbs the fallout. When the bubble bursts, they’ll use their profits to hoover
13:55
up the scraps for pennies on the dollar. So why isn’t anyone reporting on this?
13:59
Simple. Just follow the money. The financial media relies heavily on advertising
14:04
revenue from brokerages, fund managers, and financial advisors, who only make money when
14:09
you are trading and buying the dip. If the media caused panic and told everyone to hold on to their
14:15
cash, their advertisers would lose millions. What they’re doing isn’t illegal or even
14:19
unethical, although some of it is below the belt. They’re simply using the tools,
14:24
leverage, and expertise at their disposal to protect their own wealth.
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In their position, you’d likely be doing the same. So, the great wealth transfer isn’t some
14:32
great conspiracy. It’s a structural trap that is baked into the system.
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That’s why history keeps repeating itself. It’s why the billionaires come out richer…
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and the rest of us are left picking up the pieces. When some of the best financial minds on the
14:45
planet start raising the alarm, it’s time to listen. Find out how one of them built
14:50
their empire in “This Is How Warren Buffett Made $85 Billion”. Or click on this video.
