The current week on world financial markets is marked by the release of quarterly reports from the "Magnificent Four"—Microsoft (MSFT), Alphabet (GOOG) (GOOGL) (Google), Meta (META), and Amazon (AMZN). This isn't just another batch of corporate data. This is, perhaps, the moment of truth for the whole AI boom of the last two years.

Investors expected results from these releases that had to do more than just beat estimates; they had to justify the trillions of dollars of capitalization added to the market based on faith in artificial intelligence. However, a fundamental trap likely lies behind these expectations. Regardless of the actual results these companies reported—whether they demonstrated phenomenal growth or an annoying slowdown—the main problem of the modern market seems to lie not in corporate balance sheets and not even in the pace of AI implementation.

It is hidden in the very math of expectations.

The market has raised the bar so high that it now demands not just progress from reality but constant miracles. We find ourselves in a situation where a "simply excellent" result is already perceived as a failure. This is because a perfect future is priced into the stocks, a future where neither the gravity of macroeconomics nor the natural cycles of technology adaptation exist.

The Psychology of the “Overheated Dream” and Subconscious Fear

To understand the current state of the market, we need to forget about charts for a moment and look at investor psychology. Inspired by a powerful technological breakthrough in the field of AI, market participants entered a state that could be called "hyper-optimism."

They began buying shares not for what the companies earn today, but for dreams of super-profits that are supposed to materialize in the coming decade. In this pursuit, investors resemble a sprinter running at incredible speed but demanding that the finish line constantly move further away to justify the acceleration. The market, exactly like an impatient child, thirsts for the immediate execution of its boldest fantasies. If investors were previously ready to wait years for the realization of strategies, today they want to see the monetization of AI "here and now," in every quarterly report.

But here arises an important nuance. We need to clearly separate two things: real business and stock prices.

Business is a living organism. It grows, adapts, builds data centers, and trains neural networks. This process is inert; it demands time for physical embodiment and integration into the economy. The business of AI can be absolutely healthy and promising, but it most likely cannot grow by leaps of 100% every quarter. Stock prices are the fruit of psychology. They can skyrocket on a wave of euphoria, detaching themselves from the ground by hundreds of percent.

The problem is that when stock prices run too far ahead, they begin to demand the impossible from the business. And in the back of the minds of most professional market participants, this understanding has lived for a long time. Under a layer of public optimism hides, perhaps, a collective realization that the bar has been raised extremely, defiantly high.

Investors fear a correction. But deep down, they understand that it is necessary.

This subconscious consensus creates a situation where the market becomes extremely sensitive to any "cold shower." We see this in the reaction to the first warning signs: as soon as growth rates fall even slightly short of fantastic forecasts, euphoria momentarily turns into alarm because everyone understands. It is probably impossible to eternally feed the market on dreams alone.

Math vs. Emotions: The Cold Figures of the Buffett Indicator

If psychology is a delicate and hard-to-measure matter, then math is limitlessly concrete. And today, this math screams that the market has detached itself from fundamental reality by a historically unprecedented magnitude.

The so-called "Buffett Indicator"—the ratio of the aggregate capitalization of the US stock market to the country's nominal GDP—serves as the main proof of this gap. In a healthy economy, this indicator traditionally fluctuates in the range of 100-120%. This means that the value of all public companies is approximately equal to what the economy produces in a year. In periods of strong overheating, the indicator goes up. For example, at the very peak of the famous dot-com bubble in 2000, when investors bought up everything with a ".com" suffix, this indicator reached 140-150%.

And now let's look at today.

Against the backdrop of the unrestrained artificial intelligence rally, the Buffett Indicator has punched through the historical ceiling and is currently located at a staggering mark of around 228%. The stock market is currently valued almost 2.3 times higher than the entire GDP of the United States.

What does this mean in practice?

This most likely means a mathematical dead end for current expectations. The stock market is a derivative of the economy, not vice versa. The nominal GDP of the U.S. physically cannot grow at double-digit rates from year to year. Even accounting for inflation, the base economy adds only a few percent. Investors, having bought shares at current peaks, expect a corresponding return from these investments. But the economy simply is not in a position to generate the volume of real money needed to "feed" these bloated trillion-dollar capitalizations.

You cannot fool math.

If corporate profits cannot occupy 100% of GDP, then sooner or later, the gravity of the real economy will likely pull stock prices back down to earth. If this doesn't happen in the current quarter against the backdrop of regular earnings reports, it will inevitably happen in the next, or in half a year. But this landing is unavoidable.

First Warning Signs of a Return to Earth

We are already seeing the first symptoms of this sobering. A prime example is the recent news surrounding OpenAI—the company that essentially launched the current wave of technological fever. The emergence of news that ChatGPT's user base growth is slowing down, and that the company is missing some of its aggressive internal revenue goals, sent a nervous shiver through the sector.

Does this mean that generative AI turned out to be a dud? Absolutely not.

It only means that any technology develops not in a straight line extending into infinity—as stock buyers have pictured in their minds—but in waves, passing through natural cycles. A phase of stormy initial growth is always followed by a phase of consolidation, adaptation, and slower, organic scaling. The business of artificial intelligence will likely not die from this slowdown. Engineers will continue to write code, chip architectures will become more complex, and corporations will continue to embed AI into their routine logistics and management processes.

The technological revolution is taking its course.

The only ones to suffer will be those investors who, blinded by hyper-expectations, decided that this process would happen exponentially and without a single hitch. The situation with OpenAI is the first warning sign, a reminder that a real business process is always more complex and slower than a stock price chart.

Correction as a Necessity

Returning to the earnings season of the largest companies: regardless of the exact results the giants of Big Tech show in the first quarter of 2026, it is important to understand the fundamental outcome.

A market correction is necessary all the same.

If the figures turn out fantastic and the market tries to fly even higher into space, this does not cancel the laws of economics. It only stretches the rubber band of mathematical probability further. The higher the index detaches itself from GDP—going past 230% or 240%—the more painful and sharp the final snap will be when this rubber band snaps back.

If, however, the indicators turn out simply "normal" or slightly disappointing, provoking a fall in stock prices, there is no reason to scream that "all is lost." On the contrary, it marks the start of a healthy, long-overdue process of synchronizing the market with reality. As much as investors might want to believe in an endless holiday, the landing will sooner or later approach. And this will happen precisely because expectations have run too far ahead of the possibilities of the real world.

Dumping this ballast of overstated hopes is not the funeral of artificial intelligence. It is, probably, necessary therapy for the stock market. Only by freeing itself from illusions and returning to adequate valuations will the market be able to provide the technological revolution with a solid financial foundation, rather than a fragile castle in the air.

More news from Barchart

• Strong Earnings and an Inflated Buffett Indicator Are Sending Opposite Signals for the Market, and for These 2 Consumer Stocks
• Is Wall Street Headed for a Bond Crisis? What Jamie Dimon, Intermarket Analysis, and 'Murphy’s Law' Are Saying Now.
• Billionaire Bill Ackman’s Pershing Square IPOs Promise to Bring Hedge Fund Results to Retail Investors, but Institutions Dominated the Offerings
• The 228% Reality Check: Why the Stock Market Is Demanding the Impossible from AI