“All roads lead to Nvidia.”

That’s the trade. Or at least that’s how the market’s trading, particularly now that “another equity alternative to US tech is faltering,” with Europe hamstrung by political uncertainty.

The quotes are from BofA’s Michael Hartnett who, in the latest installment of his popular weekly “Flow Show” series, noted that tech shares saw a record inflow over the last several sessions.

The $8.7 billion that flowed into tech-focused equity products was the most ever. Hartnett gave it a hashtag, just to show he’s hip to how attention’s garnered in the social media era: “#AIcapitulation.” Prior to this week, the only time Hartnett had ever used a pound sign was at the end of a voicemail. (I’m just joking, Mike. I know you’re one of the cool kids.)

Ironically, Nvidia headed into Friday’s session on track for a weekly loss (gasp!). If the shares managed to rebound, it’d be the ninth consecutive weekly advance.

“Since reporting earnings just under a month ago, Nvidia shares have rallied 43%, added $1 trillion in market capitalization [and now trade] 75x trailing earnings and 47x forecasted earnings for the next four quarters,” JonesTrading’s Mike O’Rourke remarked, in a characteristically deadpan note. “While its growth profile remains strong, Nvidia now has the second highest forward P/E multiple of the [Magnificent 7] after Tesla,” he wrote, underscoring the extent to which the shares went from looking like a “bargain” in the “Magnificent 7” context (due to rapid earnings growth) to rich in the space of just four months.

Given the flows into tech funds, it’s no surprise that US growth shares likewise saw a record inflow over the week.

At nearly $12 billion, the latest weekly haul easily eclipsed every other weekly inflow on record (figure above).

“No one thinks they have enough AI, but all asset allocators are concerned about equity concentration risk,” Hartnett said. (Somebody needs to tell Hartnett’s “asset allocators” that “if Bruce Dickinson wants more cowbell, we should probably give him more cowbell!”)

O’Rourke’s skeptical, as is his wont. “With each passing day it becomes more apparent that the leadership is remarkably narrow [and] Nvidia is now even diverting flows away from the other ‘Magnificent 7’ leadership,” he said, noting that Nvidia, Microsoft and Apple are each more valuable than the entire Russell 2000 index.

Regular readers might recall my longstanding concerns about the regularity with which the mega-caps record enormous daily and weekly market cap gains. I last touched on this in April writing,

In the event the AI narrative continues to drive the same handful of mega-caps higher between reports, quarter-trillion dollar moves around earnings could become routine. If it gets to the point where a mega-cap beat and raise is good for, say, half a trillion (or a guide down risks a $400 billion wipeout), everything else becomes more or less meaningless in a lot of important respects. It’s not clear where we’d go from there in terms of strategy and analysis.

That’s from an article published on April 27. A few weeks later, Nvidia added $220 billion in market cap post-earnings.

O’Rourke went on to marvel at the same dynamic, flagging the read-through for one of Hartnett’s favorite “Wall Street versus Main Street” metrics: The ratio of financial assets to the real economy.

As the figure below shows, the S&P’s market cap is now nearly 170% of GDP, the same ratio observed in 2021 during the “everything bubble.”

“This latest Nvidia-led push and the ease with which it added a trillion dollars of market capitalization has pushed the S&P 500’s market capitalization as a percentage of GDP to 169.4%, just shy of the all-time record reading of 170.65% registered in Q4 2021,” O’Rourke wrote, before quipping: “Imagine where asset prices would be if Chairman Powell was not administering ‘restrictive’ monetary policy.”

O’Rourke called this “The Single Stock Market.” I’ve called it “The Market Singularity.” It has enormous — existential, even — ramifications for the distribution of wealth in society.

I’ve said this time and again since 2020, but it bears repeating in 2024: The very same self-fulfilling prophecy that’s concentrated almost all wealth in the accounts of a figurative handful of people will, over the next decade or so, create a scenario where the vast majority of the world’s wealth belongs to a literal handful of human beings who will, in effect, become gods.

It’s probably fair to suggest that risk — the “god risk” — is now more acute given what’s very likely to be a tight correlation between wealth accumulation and control over AI technology going forward.

On August 29, 2020, I asked, “What’s the ‘right’ price for omnipotence? How much is ‘too much’ for a share of divinity?”

Four years later, with the advent of AI, the rise of Nvidia and Jensen Huang’s breathtakingly rapid ascent up the ranks of the world’s richest humans, those questions burn especially hot.