(Kitco News) - As Wall Street's tech-fueled rally sent the S&P 500 to record highs near 6,900 points Friday, Market Strategist Gareth Soloway issued a stark warning, telling Kitco News that the market may have "possibly just put in a major top."
The market's surge has been powered by a handful of tech giants, which now account for over a third of the S&P 500's entire value. The rally was ignited this week by Amazon, which surged after reporting its AWS cloud division re-accelerated to 20% growth, and Nvidia, which became the first company in history to top $5 trillion in market cap.
This has pushed the S&P 500's forward 12-month P/E ratio to 22.9, well above its 10-year average of 18.6. But Soloway told Kitco News these are not signs of strength, but of a climax. "These are key milestones that oftentimes mark tops," he said.
The AI "Bubble" vs. 2000
Soloway argued that despite record earnings, the market is showing classic "exhaustion signs" and that the current AI-driven boom is "mania," drawing direct parallels to the 2000 dot-com bubble.
While many argue this rally is different due to the profitability of companies like Nvidia, which recently reported a 94% year-over-year revenue surge, Soloway pointed out that "in all fairness, Cisco back in 2000 was also profitable."
The key risk, he noted, is the extreme valuation relative to the entire economy.
"In 2000, Cisco's market cap was equal to 3.9% of the US GDP," Soloway explained. "NVIDIA's market capital loan is equal to 16% of the GDP in the US. Now, is that normal or is that a bubble? I tend to look at the bubble side."
He added that while retail investors are euphoric, institutional investors are selling. "Big boys like BlackRock, these players are the ones that are dumping into this euphoria," he said. "They know what's coming.”
A K-Shaped Economy
Soloway's bearish thesis is bolstered by a disconnect between asset prices and the health of the average consumer, which he described as a "K-shaped recovery."
Economic data increasingly supports this "K-shaped" divergence. While asset holders and high-income earners benefit from the market rally, many other consumers are showing signs of significant stress. U.S. total credit card debt has ballooned to a record $1.33 trillion, with the average APR for interest-accruing cards climbing to 22.83%.
This debt is accumulating as real wage growth slows. According to the Minneapolis Fed, the slowdown in 2025 is "more pronounced for low-wage workers," whose real wage growth has fallen from an annual rate of 3.9% to just 1.5%.
This split is also evident in consumer spending. Data from early 2025 showed that spending on luxury goods fell 7%, while discount-focused retailers are projected to "significantly outperform" the broader market. Soloway pointed to this trend in recent earnings, noting Chipotle said its consumers "are not able to afford even going out to Chipotle anymore."
Bitcoin's Warning and Gold's Opportunity
In this environment, Soloway is watching Bitcoin as a "leading indicator" for a stock market correction.
"It's very concerning that a risk asset like Bitcoin is not seeing more upside" while the Nasdaq hits new highs, he said. He noted that Bitcoin topped out four to six weeks before the stock market in 2017 and 2021. "I also am worried that Bitcoin is sending us a signal here."
Conversely, Soloway called the recent pullback in gold from its $4,300 peak a "huge buying opportunity." He identified a specific entry zone for the metal and a long-term price target.
"This is where I start loading the boat on gold," Soloway said, pointing to a key chart level. "Where if we get that $3,500, $3,600 level, I do think we see $5,000 in 2026 as a price target".
Kitco