Steve Hanke Warns Stock Market Bubble as Big Tech Fuels $10 Trillion Frenzy

Economist Steve Hanke says his bubble detector shows the US stock market in clear bubble territory, even as Big Tech powers one of the fastest equity rallies on record.

His warning lands as five mega-cap tech stocks pull the S&P 500 to fresh highs. Traders are also piling into call options at a pace never seen before in modern markets.

Steve Hanke Flags Bubble Territory as Warning Signs Stack Up

The Johns Hopkins applied economics professor pointed to the bond-stock yield spread as a second confirmation signal alongside his bubble model.

“My Bubble Detector says the US stock market is in bubble territory. So does the bond-stock yield spread. Buckle up,” he warned.

Hanke previously served as a senior economist for President Ronald Reagan and has flagged similar overvaluation through 2025 and 2026.

The warning arrives during a historic reversal. Analysts at Bull Theory said US equities added roughly $10 trillion in 39 days. The Nasdaq topped 29,000 for the first time, and the index reached 7,400.

Five Tech Stocks Carry the Rally

Five companies, comprising Alphabet, Nvidia, Amazon, Broadcom, and Apple, drove roughly half of the S&P 500’s gains since April 1.

The five stocks added about six percentage points to the index’s 12% climb over that stretch. Alphabet led with a 38% advance, followed by Nvidia at 21%, Amazon at 30%, and Broadcom at 33%. The equal-weighted S&P 500 has risen only 6% in the same window.

Mark Newton, head of technical strategy at Fundstrat, told Milk Road that the Magnificent Seven traded sideways for months before this leg higher.

He said strong earnings and heavy AI capex gave investors confidence that tech could keep carrying the broader market.

Call Options and Retail demand push risk appetite to records

Call option volume on the S&P 500 hit a record $2.6 trillion in notional value on Wednesday, per Kobeissi Letter. Calls now account for around 58% of all S&P 500 options traded, the highest share on record.

Retail buying mirrors that mood. Individual investors bought $1.1 billion of tech hardware stocks in the week ending May 6. That marked the second-largest weekly figure on record and the fifth straight week of net inflows.

SanDisk has surged 3,731% over the past year, outpacing Qualcomm’s 2,620% gain in 1999.

Whether Professor Hanke proves early or wrong will depend on how long AI revenue can justify these valuations.