The stock market’s been on a long, confident run since late 2022, but Morgan Stanley’s Andrew Slimmon feels we’re moving swiftly towards the final act. 

The tension he’s alluding to fits the tape perfectly.

For perspective, the S&P 500 is up nearly 16% year to date, a gain that feels like a one-two punch combo fueling dip-buyers while reigniting FOMO across Wall Street.

At the same time, the “Magnificent 7” keep doing the bulk of the heavy lifting, jumping 26% year to date, underscoring that AI demand and mega-cap balance sheets are still dictating the rhythm.

Nevertheless, in a CNBC interview, Slimmon framed it as a late-stage bull with growing frothiness. 

The dilemma he points out is that earnings continue to outperform forecasts. At the same time, Big Tech continues to outperform everyone else, creating a unique scenario that is risky to head for the exits just as the music gets louder.

We’re in the late innings of a bull market

Slimmon is making the case that the current bull market, which began in October 2022, has entered its later innings. Though it isn’t over yet, he feels it is becoming increasingly speculative.

Investors are looking to chase the more risky, unprofitable tech stocks, which effectively echoes the late 1990s pattern that ended with fireworks.

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The investing frenzy is being fueled by excess liquidity and the fading fear of losses. 

As Slimmon put it:

However, he points out that a late stage doesn’t exactly point to “game over.”

In fact, some of the biggest runs usually occur just before the cycle turns, and that’s perhaps where this bull story gets a lot trickier.

Morgan Stanley strategist Andrew Slimmon on CNBC outlines why speculation may signal a late-stage rally.

Michael M. Santiago/Getty Images

What a “late stage” market rally looks like in real time

Slimmon’s “late stage” diagnosis can be backed up by the data that’s coming in.

For instance, UBS sampled a basket of unprofitable tech stocks in late September, which sprinted ahead, up 21% since late July and blowing past their profitable peers, Bloomberg reported.

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On the more speculative front, Beyond Meat ripped hundreds of percent in days, which is the clearest meme stock flare we’ve seen this year, Reuters noted.

And although some quality tech stocks are still unprofitable, we see Snowflakeup over 50% year to date on AI optimism, outrunning earnings.

How every bull gets frothy

  • Roaring ’20s (1921-1929, 8 years): Easy credit, along with the anything-with-a-ticker hype, effectively turned the “new era” into a familiar trap.
  • Go-Go ’60s (1949-1968, 19 years): The long postwar climb basically wrapped up with “Nifty Fifty” favorites that investors swore you could “buy at any price.” 
  • Reagan-to-’87 (1982-1987, 5 years): Deregulation chatter and portfolio insurance lulled traders, leading to a one-day crash that reminded everyone that gravity still works.
  • Dot-com run (1990-2000, 10 years): Eyeballs trumped earnings with flimsy IPOs and trading forums fueling the frenzy.
  • Pre-GFC climb (2003-2007, 4-5 years): Easy money turned the “housing never falls” from mantra to mistake.
  • Post-crisis marathon (2009-2020, 11 years): Mega-cap winners and unicorn IPOs with losses spearheaded the late stretch.
  • Stimulus rocket (2020-2022, 21 months): Zero commissions, checks in pockets, and meme-stock mantras dominated proceedings.
  • AI-led surge (2022-present, 3 years): Big Tech carries the weight of the index while money-losing tech and fresh “meme” tickers continue grabbing quick bursts.

The Fed’s role in stretching (or shortening) the cycle

On top of that, Slimmon warns that the aggressive rate cuts could potentially “inflate the bubble faster.” 

He feels that holding off on cuts could help extend this bull run. In doing so, he points to liquidity along with the sheer volume of money that’s still sloshing around as both the fuel and the fuse. 

Fed rate cuts in 2025 (so far)

  • Sept. 17, 2025:Fed cut 25 bps to a 4.00% to 4.25% target range.
  • Oct. 29, 2025: Fed cut another 25 bps to 3.75% to 4.00%.
  • Year to date: 50 bps of total easing across those two cuts (Sept. 17 & Oct. 29).

Why the “Magnificent 7” still rule this market

Despite the warnings, Slimmon isn’t ready to bet against the heavy hitters in the “Magnificent 7.” 

Their earnings are robust while guidance continues to improve, as the demand for AI infrastructure remains off the charts. Betting against them, he argues, may seem like a sound strategy, but it hardly ever pays off. 

Magnificent 7 with tickers and year-to-date moves:

  • Apple (AAPL): +7.97% YTD
  • Microsoft (MSFT): +22.85% YTD
    Source:Barron’s
  • Nvidia (NVDA): +50.79% YTD
    Source:Barron’s
  • Alphabet Class A (GOOGL): +48.54% YTD
    Source:Barron’s
  • Amazon (AMZN): +11.32% YTD
    Source:Barron’s
  • Meta Platforms (META): +10.73% YTD
    Source:Barron’s
  • Tesla (TSLA): +13.05% YTD

Wall Street’s mistake, Slimmon argues, is essentially underestimating actual earnings. Even with all the talk of tariffs, inflation, and geopolitical noise, corporate profits have held up remarkably, which reminds investors that valuation ratios usually only matter if forecasts are accurate.

In conclusion, Slimmon’s message advises against pulling cash out but recommends staying selective. He also favors the market’s big winners and companies making the best use of cash flow, not debt, to fund AI-powered expansion growth. 

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