US stocks are priced for a level of American power and AI payoff that may not be real, and that combination looks bad for anyone heavily invested in the market.

• Stock values are at record highs against the size of the economy, a level last seen before past crashes.
• The AI trade rests on the Magnificent Seven, with heavy circular funding between them and 20% of the S&P 500 riding on a handful of names.
• China is matching US AI with cheap open models, undercutting the idea that American tech is uniquely valuable.
• A "geopolitical bubble" is deflating too — the perception of untouchable US power peaked and has since been punctured, and bond markets show less faith in Western governments.
• One theory of 1929: cheap oil made the coal-based economy suddenly worthless, and it took decades to rebuild — AI could do the same to today's economy.

Outlook: Expect rate hikes ahead, with the risk that AI turns out to be a replacement for the current economy rather than an upgrade to it.