The current market is characterized by "miniature frenzies" across various sectors.

From investments in artificial intelligence (AI), cryptocurrencies, and gold to lab-grown meat and even the donut industry, signs of localized overheating are surfacing throughout the financial landscape. However, unlike the typical "boom-bust" cycles of the past, these instances of excessive speculation have yet to disrupt the overall upward trend of the market—at least not for now.

Senior market analyst Ed Yardeni, president of Yardeni Research, describes the current state as "the fear of bubbles has itself formed a bubble." He argues that the so-called "everything bubble" has never truly materialized. Instead, he notes the presence of dozens of "miniature frenzies" in speculative assets, meme stocks, and data center stocks today. These phenomena rise and fall intermittently without affecting the broader market.

This market enthusiasm exhibits a "fragmented" feature. Investors are not witnessing a sweeping prosperity across the market, but rather a series of scattered, small-scale frenzies. This includes AI concept stocks, record highs in gold, the emergence of second-generation special-purpose acquisition companies (SPACs 2.0), and leverage-driven trades.

Even Bitcoin (BTC=F), which has declined from a near $120,000 high but remains around $110,000, showcases the dual characteristics of both fervor and unusual stability in the current market.

As Yardeni reminds us, this "drama" is not something we haven't seen before.

The concept of the "everything bubble" gained traction during Janet Yellen's tenure and intensified during the economic stimulus measures amid the pandemic in 2020-2021, which also sparked multiple rounds of severe but short-lived speculative frenzies (such as the "retail trader" craze, GameStop’s price volatility, and meme stock enthusiasm).

While the extreme speculative behaviors during that time eventually cooled down, they did not lead to financial disaster or economic recession. Today’s scenario may play out similarly: bubbles will always burst, but history shows that after a burst, conditions often lay the groundwork for the next round of market upswings.

Current market conditions are not poor either. The stock market is at historical highs, and the U.S. real GDP has also reached new records. Apart from a two-month lockdown in early 2020 during the pandemic, there has been no officially recognized economic recession in the U.S. for 16 years.

Goldman Sachs recently released a report echoing similar sentiments, exploring whether "AI has entered a bubble phase."

Goldman Sachs strategists Eric Sheridan and Kash Rangan warned that the expansion in the AI sector is showing "cyclical" characteristics, with large tech firms engaging in reciprocal procurement and investment.

"This cyclicality does raise concerns for me," Sheridan noted, adding, "It's another testament to the current period resembling the internet bubble era."

However, "similarity" does not equal "replay." Sheridan and Rangan both emphasize that today's leading tech firms are not comparable to those during the 1999 internet bubble. Chipmakers like NVIDIA (NVDA), along with companies like Microsoft (MSFT), Meta Platforms, Inc. (META), Alphabet (GOOG), and Amazon (AMZN), generate significant cash flows, return capital to shareholders, and currently have valuations well below the extremes seen during the internet bubble.

"AI may not have formed a bubble yet," Sheridan stated.

If Yardeni's perspective holds true, the core logic might be that small bubbles will continually form and eventually burst. However, in a robust market that can sustain these bubbles, the bursting of a few bubbles is not problematic—it rather affirms that the entire market remains on solid ground.