The market is giving off a "year 2000 vibe"? Goldman Sachs partner: "Calling the top" is futile; perhaps we should embrace the bubble.

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The surge in tech stocks and semiconductors is making Wall Street veterans sense a somewhat familiar atmosphere.

Rich Privorotsky, a partner at Goldman Sachs, wrote bluntly in his latest client report: The current trajectory of US stocks "has a bit of the flavor of the year 2000," but the earnings fundamentals behind this rally are far more solid than back then. His conclusion is quite thought-provoking: during the formation phase of a bubble, "calling the top is futile." Investors perhaps should go long and embrace this process. This statement reflects the extreme excitement of the current market sentiment and reveals the unspeakable tension amid the battle between bulls and bears.

Currently, the US stock market is in what Privorotsky describes as a state of "upward frenzy"—call option skew has surged, Commodity Trading Advisor (CTA) strategies have fully shifted to net long, and volatility control strategies continue to mechanically provide buying support. The core narrative behind it all is the AI computing power theme, represented by tech, semiconductors, and memory chips. Korea’s SK Hynix surged 12% in a single day, becoming the most direct footnote to market sentiment.

However, beneath this feast, cracks do exist. Privorotsky pointed out that there are already concerns on the consumption end, and market breadth has basically fallen back to recent lows. Meanwhile, the Iran situation remains unresolved, global inflationary pressure has reignited, and betting markets now put the probability of a UK recession above 50%—these risks have not disappeared, they are merely temporarily obscured by the brilliance of the AI narrative.

Semiconductor Frenzy and the “Echoes of 2000”

The core drive of this round is the market’s nearly infinite imagination for AI computing power demand. Privorotsky said he has no disagreement with the broad direction that AI “agentification” will boost long-term computing power demand, but he is more concerned with the questions: where will the computing power ultimately land, and how will the marginal cost of computing evolve.

This doubt is not unfounded. He pointed out that open-source models are rapidly seizing market share in basic programming tasks, cost-sensitive users are clearly seeking to cut costs, and smaller models can now run smoothly on local CPUs to handle low-value tasks. If model compression technology continues to advance, the real question for the semiconductor industry will no longer be whether demand for computing power can grow, but how much demand will shift to cheaper, distributed computing power—at which point supply may really be able to catch up with demand.

Nevertheless, before the bubble bursts, the market’s logic has its own inertia. Privorotsky admitted that as a contrarian skeptic, he cannot help but imagine where things might go wrong; but he also acknowledged that under the current market structure, the cost of fighting the trend is extremely high.

Inflation and Macro: The Overlooked Undercurrents

In contrast to the semiconductor hype, macro pressures are quietly accumulating. China’s latest CPI and PPI data both exceeded expectations, and Privorotsky sees this as an "uncomfortable prelude" for this week’s US CPI data. He pointed out that China’s deflationary shock is fading, with focus shifting to reflation. Coupled with the global restocking cycle and supply shocks in the product market, inflationary pressures are heating up across multiple dimensions—and global fiscal deficits show almost no signs of narrowing. This combination creates clear pressure on fixed income assets.

On Iran, Iran’s response to the US peace proposal was deemed "unacceptable" by Trump, and oil prices rose about 4% overnight. But Privorotsky believes that both sides currently think they have the upper hand and have limited willingness to escalate, so the situation is more likely to drift in stalemate. He concluded with a touch of dark humor: "Let’s hope memory chip prices keep rising...because the energy situation feels a long way from truly being solved."

Risk disclosure and disclaimerThe market carries risks; investment requires caution. This article does not constitute personal investment advice, nor does it consider the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions here are suitable for their specific circumstances. Investing based on this content is at your own risk. ```