Jim Iuorio Warns of AI Bubble in Early Stages, Predicts 5% Market Pullback

This analysis is based on Jim Iuorio’s commentary on Schwab Network [1] published on November 13, 2025, where he warned about AI bubble formation and predicted an upcoming market pullback.

Jim Iuorio’s market commentary arrived during a significant market decline, with the S&P 500 falling 1.3% to 6,737.49, NASDAQ dropping 1.69% to 22,870.36, and the Dow Jones declining 1.49% to 47,457.22 [0]. The technology sector underperformed with a -1.57% decline, led by AI stocks NVIDIA (-3.58% to $186.86) and Microsoft (-1.54% to $503.29) [0]. Both AI leaders are now trading below their 20-day moving averages, suggesting technical weakness.

Iuorio expressed disappointment that the anticipated market rally following the government reopening did not materialize [1]. This aligns with political uncertainty surrounding the shutdown deal, where House Democrats erupted in fury after eight Senate Democrats sided with Republicans to reopen the government under terms many viewed as inadequate [3].

The analyst’s bubble concerns are supported by market concentration data. By late 2025, 30% of the US S&P 500 and 20% of the MSCI World index was held by just five companies - the greatest concentration in half a century [2]. AI-related enterprises accounted for roughly 80% of gains in the American stock market over 2025 [2], creating the “maniacal fervor” Iuorio referenced.

: The extreme concentration in AI and large-cap tech stocks creates systemic vulnerability. NVIDIA’s elevated P/E ratio of 53.24 and Microsoft’s 35.80 [0] reflect stretched valuations typical of bubble conditions.

: Both major AI stocks trading below key moving averages indicates potential further downside. NVIDIA’s 30-day performance shows 1.23% decline despite reaching highs of $212.19, while Microsoft is down 2.67% over the same period [0].

: The market data shows capital flowing to defensive sectors (Consumer Defensive +0.87%, Healthcare +0.06%) while Utilities (-3.11%) and Consumer Cyclical (-2.87%) suffered the largest losses [0], suggesting risk-off sentiment.

: Iuorio’s characterization of being in “the first third” of AI bubble creation suggests significant upside potential for the bubble itself, but also indicates substantial risk of corrections during the formation process.

:

• The combination of extreme market concentration, elevated valuations, and technical weakness creates conditions for the 5% pullback Iuorio predicts [1]
• Historical patterns show similar market concentration and valuation extremes have preceded significant corrections [2]
• Government shutdown political uncertainty may continue to weigh on market sentiment [3]

:

• Iuorio views the anticipated pullback as a buying opportunity, suggesting strategic entry points for long-term investors [1]
• The “first third” assessment implies substantial development potential for AI technologies despite near-term volatility
• Options strategies using puts for portfolio protection, as Iuorio suggests, could provide risk management during volatile periods

:

• Options market activity and put/call ratios for institutional positioning signals
• Volume patterns during declines to detect institutional selling pressure
• Upcoming earnings reports from major AI companies as potential catalysts
• Federal Reserve policy impacts on high-valuation tech stocks

The market context on November 13, 2025 supports Iuorio’s concerns about AI bubble formation, with broad-based market weakness, underperformance of AI leaders, and defensive sector rotation [0]. The extreme market concentration in AI stocks, accounting for 80% of 2025 market gains [2], creates systemic risk conditions. Iuorio’s prediction of a 5% pullback [1] aligns with technical indicators showing AI stocks below key moving averages and elevated valuation metrics [0]. The political uncertainty surrounding the government reopening [3] may have contributed to the failed rally expectation. Investors should monitor options positioning, earnings catalysts, and sector rotation patterns while considering Iuorio’s advice to maintain flexibility and use protective options strategies during this volatile period.