A Market Verging on the Absurd
As an Iran deal has landed (for real this time?) and SpaceX has taken off to a wild valuation, here’s my take on the market now.
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Real progress seems to have arrived in ending the conflict with Iran and reopening the critical Strait of Hormuz. This comes after more than three months of announcements and tweets that led to nothing concrete, although many of them did move the markets. Nothing is done until the Fat Lady sings, but there appears to be real hope on this front with this critical choke point scheduled to reopen on Friday if all goes to plan. That said, the cumulative impacts on the global economy and supply chains will take many quarters to fully recover. Some key facilities in the Gulf region will take years to fully repair and being brought back online.
The U.S. economy has held up better than those of Asia and Europe, due largely this nation’s far greater energy independence. That said, U.S. consumers and businesses have paid the price for this war via higher inflation. American households are once again losing buying power against inflation for the first time since 2023. And that is against the “official” measure of inflation from the Bureau of Labor Statistics. My view that any calculation that includes the supposition that health care premiums have fallen on average over the last five years, is suspect, to put it kindly.
The U.S. economy has also been bolstered by nearly $2 trillion in annual fiscal deficit spending. Much of this largess is wasteful, little of it goes to productive uses, and obviously this level of deficit spending is not sustainable over the longer term. That said, it is bolstering the economy to some degree for now.
The main driver of the U.S. economy remains the surge of tech spending driven by the massive AI infrastructure build out. It also has been the primary engine of the stock market rally since the end of 2022. Investors experienced this again last week when Space Exploration Technologies Corp. (SPCX) spurted ahead by 19% on its debut Friday.
SpaceX ended the day with an approximate $2.1 trillion market capitalization. Not bad for an amalgamation of a social media company, AI enterprise, satellite broadband company and, of course, a firm that builds space rockets and that lost nearly $5 billion in 2025 on just less than $19 billion in sales. At Friday’s close, the market is valuing SpaceX at roughly 113-times revenues. This makes Tesla, Inc. (TSLA), which many analysts think is overvalued, look downright cheap at just under 15-times sales. Some call Donald Trump the greatest salesman in the world. In my view, he has nothing on Elon Musk, the world’s first trillionaire.
And thanks to recent listing changes, millions of passive investors in Nasdaq-linked exchange-traded funds will soon gain exposure to SpaceX within their portfolios at these bargain basement valuations. The same goes for OpenAI and Anthropic if those money losing enterprises can debut on the market with trillion-dollar market caps before the IPO window inevitably closes.
This curmudgeon can fully understand how legendary investor Warren Buffet spent his last few years of his illustrious investing career building up record cash balances at Berkshire Hathaway (BRK-B). If this market hasn’t already “jumped the shark,” it feels on the cusp of doing so.
At the time of publication, Jensen had no position in any security mentioned.
