The five driving forces behind the perfect storm in the U.S. stock market

Author: Anthony Pompliano, Founder and CEO of Professional Capital Management; Translation: Shaw, Golden Finance

The stock market continues to hit new all-time highs, with investors remaining cautiously optimistic. No one wants to become the bagholder by rushing in at the bubble's peak, yet it's hard to resist the lucrative gains from the current rally — just open a securities account to share in the rapid growth dividends.

Fortunately, at this stage, investors entering the market are benefiting from the favorable trend of the "Abundant Dividends Perfect Storm."

I use this proprietary term to summarize the core logic of the current market operation: this "Abundant Dividends Perfect Storm" is driven by five core forces: intelligent capacity, corporate earnings, dollar liquidity, risk appetite, and time cycles.

First is abundant intelligent capacity: major artificial intelligence (AI) model laboratories are leveraging conversational interfaces to bring disruptive technologies to the global stage, officially ushering in the era of intelligent dividends. Everyone can ask questions through chat interfaces, and market demand for top-tier intelligent technology is unprecedented.

Jim Bianco’s compiled data chart on computing power token consumption vividly shows that AI deployment and adoption are accelerating beyond expectations.

Jim Bianco wrote: “Token consumption (blue bars) is soaring rapidly. This surge began in January this year, as AI products like Claude Cowork and Moltbook under OpenClaw entered the public eye, AI Agents have officially become mainstream. Users build AI agents and write code, driving exponential growth in AI usage, and this momentum has only just begun.”

A large part of the recent demand surge comes from AI intelligent agents, not solely from human users. The market’s demand for artificial intelligence is nearly limitless, which is why the term “abundant intelligent capacity” is used.

The AI deployment boom further fuels profitability. Corporate earnings reports are rising steadily, and the actual performance in recent earnings seasons confirms this, with upward revisions to 2026 profit expectations also continuing.

Charlie Bilello of wealth management firm Creative Planning estimates that, compared to last year, the earnings per share (EPS) of U.S. companies are expected to grow by 24% year-over-year by the end of this year.

For giants with market caps in the hundreds of billions or even trillions of dollars, such growth rates are astonishing. Last weekend, my friend Jordi Visser reminded me to watch pharmaceutical giant Eli Lilly, which reported a 55% year-over-year revenue increase.

A trillion-dollar market cap company achieving 55% annual revenue growth? Truly remarkable. It is such high growth in revenue and profits that continues to propel the U.S. stock market upward.

Besides the improvement in corporate fundamentals, another driver of rising stock prices is ample market dollar liquidity. It’s important to note that about 40% of the total circulating dollars are newly printed in the past six years.

More funds chase existing high-quality listed companies, leading to higher valuations and stock prices. Massive capital inflows benefit equity investors but erode savers’ assets through high inflation.

However, the side effects of the U.S.’s loose and disorderly fiscal and monetary policies go beyond inflation. The consequence is that many ordinary people find it difficult to achieve income growth, leading them to increasingly turn to market speculation with their money, thus creating abundant risk appetite.

The hot trading of at-the-money options and leveraged ETFs vividly confirms this. Citadel data shows: “Currently, retail investors’ investments in semiconductor options contracts are at a new high compared to the average since 2020, reaching 4.9 times the average; this figure is about 25% higher than the previous peak driven by the 2024 AI chip boom.”

Profit growth combined with the shrinking purchasing power of the dollar has jointly created a frenzied market environment for heavy risk asset allocations.

Moreover, this situation is unlikely to end quickly in the short term. Phil Rosen, a writer for the financial program Opening Bell, states: “This bull market has lasted 1,326 days, about 600 days shorter than the average since 1949. The bears waiting outside are betting against the historical norm of market cycles.”

I call the fifth driving force the abundance of time dividends. As the famous saying goes: the longer the market remains irrational, the more likely it is to last until investors’ funds are exhausted. This also reminds investors that entering too early can sometimes be a misjudgment.

It is precisely these five abundant drivers—intelligence, profitability, dollar liquidity, risk appetite, and time—that convince me the stock market still has upward potential. Based on these factors, I believe this bull market is just heating up, and the market has not yet reached its top. Whether my judgment proves correct or not, only time will tell.