Parade participants in a flash mob dance to “Thriller” by Michael Jackson (Roy Rochlin/Getty Images)

These charts from Goldman Sachs show how much the stock market is in thrall to a speculative frenzy

IPO pops and SPACs are back, call options are in ascendance, and trading activity in penny stocks, unprofitable companies, and expensive stocks is mooning.

Luke Kawa

7/28/25 8:13AM

The dot-com bubble and meme stock frenzy of 2021 are the only times speculative fervor has held a tighter grip over the stock market than it does today, according to Goldman Sachs.

Strategists led by Ben Snider detailed the many ways in which the footprint of exuberant risk-seeking behavior in the stock market is growing, headlined by the sharpest three-month rise in the bank’s “speculative trading indicator” outside of those two high-profile episodes.

This metric — which tracks how much trading activity there is in penny stocks, unprofitable companies, and very expensively valued stocks — has reached historical extremes:

That’s supported by the “good vibes only” message from social media on the stock market:

Call options, often the instrument of choice for retail traders piling into a new stock, are dominating options activity:

Snider and company note that buyers’ binges have caused some of short sellers’ favorite targets to surge…

…with their peers at JPMorgan pointing out that these squeezes have been amplified by those bearish bets getting closed at a frenzied pace:

JPM: Hedge Fund short covering last week was a 3 standard deviation event (so in the 99.7th %ile).
(via ZeroHedge) pic.twitter.com/zjF7dgn4Iq
— Neil Sethi (@neilksethi) July 27, 2025

Not only is the index inclusion pop back, but IPOs are enjoying very strong starts relative to history:

And SPACs are back:

Goldman spotlights BigBear.ai, Lucid, Nvidia, Tesla, and Plug Power as some of the companies with the highest volumes in the Russell 3000 over the past month. That’s indicative of a bit of a barbell strategy in these speculative endeavors, with traders buying smaller tech companies and some of the largest companies in the world. Notably, its list excludes Opendoor, which was booted from the Russell 2000 (and 3000) near the end of June before trading 1.9 billion shares last Monday.

But when we zero in on the stocks with high turnover as a percent of shares outstanding, that list is dominated by smaller, more speculative companies that include thematically intriguing groups like quantum computing or crypto-linked companies.

“The recent rise in speculative trading activity signals near-term upside risk for the broad equity market but also increases the risk of an eventual downturn,” Goldman concludes. “During the last 35 years, other sharp increases in speculative trading activity have signaled above-average subsequent 3-, 6-, and 12-month S&P 500 returns, but returns typically faltered on a 24-month horizon.”

Max Knoblauch3m

Carvana tumbles on report from short seller Gotham City Research

Used car retailer Carvana is down more than 12% on Wednesday, with shares on pace for their worst day since October.

A new report from short seller Gotham City Research, which had teased its publication in a post on X earlier in the day, appears to be dragging shares down. In the report, Gotham alleges Carvana’s 2023-24 earnings were overstated by more than $1 billion. (For perspective, Carvana’s earnings in those two years totaled just over $550 million.)

Gotham’s report also alleges that Carvana’s earnings are “far more dependent” on auto loan companies DriveTime and Bridgecrest than the market currently takes into account and that DriveTime’s subsidies fuel over 73% of Carvana’s earnings before interest and taxes. In its post teasing its findings, Gotham said Carvana would “age as one of the biggest Corporate Scandals of America over time.”

Per the report:

“We see problems with accounting, disclosure, and business practices that will lead to regulatory trouble. At best, we believe CVNA is far less profitable than believed, as a standalone business. At worst, CVNA is more like Tricolor, rather than Amazon. Either way, shares face massive downside risk to the share price.”

Carvana did not immediately respond to a request for comment.

Wall Street thinks the next bottleneck in AI is chip equipment

Buying snarls in AI has so far led to big gains; analysts say semiconductor equipment stocks, known as semicaps, are where things will clog up next.

Matt Phillips9m

Matt Phillips4h

Corning reports better-than-expected Q4 results

Glassmaker Corning, which saw its shares explode higher Tuesday after announcing an up to $6 billion deal to supply fiber-optic equipment for Meta AI data centers in coming years, issued its Q4 numbers before the start of trading Wednesday.

The company reported:

Non-GAAP core earnings per share of $0.72 vs. consensus expectations of $0.71 from analysts, according to FactSet.
Core sales of $4.41 billion vs. a $4.36 billion consensus estimate from analysts.

The company expects Q1 2026 core sales of $4.2 billion to $4.3 billion, compared to a consensus estimate of $4.26 billion from Wall Street, with core EPS between $0.66 and $0.70, the midpoint of which is a penny higher than the Street’s estimate of $0.67.

Investors traded the stock, which rose 16% on Tuesday after the Meta news, down 3.4% before markets opened. Through the end of Tuesday’s session, shares had nearly doubled over the last six months.

Matt Phillips4h

GE Vernova, cornerstone of AI energy trade, dips after Q4 profit trails estimates

GE Vernova, which makes turbines used in power plants and has been a cornerstone in the AI power trade, is falling after posting a mixed bag of Q4 results on Wednesday morning.

Adjusted EBITDA of $1.16 billion fell short of the $1.25 billion estimate from analysts polled by Bloomberg, dragged down by a loss in its wind business.
Total revenue came in at $10.96 billion vs. the $10.21 billion consensus expectation from analysts polled by FactSet.
GE Vernova gave full-year 2026 sales guidance of between $44 billion and $45 billion vs. a consensus estimate of $42.13 billion.
New orders came in at $22.2 billion vs. expectations for $18.28 billion.

GE Vernova is up some 400% over the last two years, but the majority of those gains were booked by August 2025. Since then, the shares have been largely range-bound, and are down a bit after this morning’s report.

J. Edward Moreno5h

Starbucks jumps after same-store sales beat estimates in Q1

Starbucks rose as much as 9% in premarket trading and continued to soar when the market opened on Wednesday after it reported financial results that beat Wall Street estimates on same-store sales for its fiscal Q1, with management projecting better-than-expected results for that key metric for the full fiscal year.

For the last three months of 2025, Starbucks reported:

$9.9 billion in revenue, higher than the $9.6 billion analysts were penciling in.
Same-store sales growth of 4%, significantly higher than the 2.3% analysts polled by FactSet had estimated. This marks the second consecutive quarter where that key metric was positive.
Adjusted earnings per share of $0.56, less than the $0.59 the Street was expecting.

The sales beat is a sign that CEO Brian Niccol’s turnaround plan, which includes ideas like the “bearista cup” and extending seasonal drink periods, may be moving the needle. “It is clear from our top-line results that our ‘Back to Starbucks’ plan is working and our turnaround is taking hold,” Niccol told analysts Wednesday morning.

Starbucks’ China business saw comparable-store sales grow by 7% after years of stagnant sales. The company said in November that it would sell a 60% stake in its China sector to Boyu Capital. “China was a standout,” Niccol said.

The company also shared its first financial outlook since suspending its forecast in October 2024. For its fiscal year ending in September, Starbucks guided for same-store sales to rise by at least 3%, more than the 2.83% growth that Wall Street was projecting. Management also expects annual adjusted earnings per share in a range of $2.15 to $2.40, compared to the $2.35 analysts were estimating.