It's not a bubble, but an “air hole”. Funds are buying bitcoin and Tesla's valuation is “absurd”

The year is coming to an end, and the American market is increasingly considering the coming months. Investors are wondering whether the trends that shaped this year's financial markets are likely to continue into the next year.

Larry Fink: Sovereign funds are buying bitcoin

Sovereign funds are buying depreciated bitcoin – Larry Fink, the head of BlackRock, openly talked about it this week at the New York Times economic forum.

“We're seeing more and more serious, long-term investors investing in it,” Fink said. – I can assure you that this is not just one sovereign wealth fund. They are slowly buying in at $120,000, $100,000. I know they were buying more at the $80,000 level.

– They build long-term positions, and if they are held for many years, it is not speculation, but investing for a specific purpose – explained the president.

According to him, the largest cryptocurrency is seen as a hedge against growing government debt and inflation.

– I am convinced that there is huge, huge potential for this scenario – he added.

BlackRock is one of the first institutions on Wall Street to give its clients access to the cryptocurrency asset class.

Michael Burry: Tesla's capitalization is absurd

Michael Burry, head of the hedge fund Scion Asset Management, has recently begun sharing his observations unexpectedly frequently. This time he targeted shares of Tesla and Palantir.

– Tesla dilutes its shareholders' shares by approximately 3.6%. annually and does not organize share buybacks, he said. – With news of Elon Musk's $1 trillion compensation package, dilution is sure to continue. Tesla's market capitalization is ridiculously overvalued today and has been for a long time.

– Another “beauty” – according to the investor – is Palantir.

This company dilutes shareholder ownership by 4.6%, despite its share buybacks.

– Palantir does not generate a profit after adjusting the results for the part of remuneration paid in shares – says Burry.

BlackRock: There are still many shocks ahead

Helen Jewell, BlackRock's chief investment officer in EMEA, is bullish on AI stocks.

– Do I expect an upward trend in AI-related growth stocks? Yes. “We're seeing incredible capital expenditures by companies with incredible amounts of cash,” Jewell told Reuters.

However, this does not mean that it will be a journey without disruptions.

– Do I think there will likely be bumps along the way? Yes, too, added Jewell.

Hedge funds are using near-record levels of leverage, which means they may be forced to suddenly liquidate large numbers of market positions when stock prices fall.

Jewell also stated that she is increasing the share of shares of European energy and infrastructure companies – such as Siemens Energy – in her managed portfolios.

Bank of America: It's not a bubble, but an air hole

– Is it the year 2000 now? Do we have a bubble? No, said Savita Subramanian, head of U.S. equity strategy at Bank of America. – Will AI continue to enjoy an unfettered leadership position? Also no.

Investment expenditures of companies building data centers increased to 60%. their operating cash flow, up from 30 percent. a decade ago. However, in the dot-com era, this rate reached 140%.

Subramanian admitted that skyrocketing valuations and market concentration “rhyme with Y2K.” However, she recalled a few differences.

The allocation of funds to stocks is much smaller than in the dot-com era, the increase in valuations is due to rising profits, public offerings (IPOs) are smaller, and speculation in the shares of unprofitable companies is not as rampant as at the end of the last century.

Subramanian sees the current situation as a pause rather than the beginning of a meltdown. He describes it as a potential “air hole” in which capital expenditure outpaces revenue growth. This delay between investments and their monetization – especially in the context of energy and infrastructure bottlenecks – may worry investors in the short term.

According to the bank, the S&P 500 index should end December next year at 7,100 points, which would mean just over 3%. increase above the level at the beginning of Friday's session.

JPMorgan: Prospects for European banks are great

“We are entering 2026 with an unchanged and confirmed positive outlook for European banks,” say JPMorgan Chase analysts.

The improving economic situation, stable interest rates, stable inflation and unemployment rates allow such expectations to be formulated. Earnings growth and share buybacks also provide grounds for positive forecasts.

European bank shares are heading to end their thirteenth consecutive quarter in positive territory, and this year they are the best performing segment of the European stock market. The Stoxx 600 Banks Index is up about 55% this year, compared with a 13% gain in the broader index.

Despite this, banking shares are still trading at a 33% discount compared to other sectors of the economy, the sector has a strong capital position according to analysts and can be expected to see 6% annual earnings growth in 2025–2027.