Monday Takeaways: Record Highs and a 35% AMD Surge – Is This Peak Risk-On?

Shah Gilani|October 6, 2025

AMD exploded to the upside this morning… and it tells you everything about where we are in this cycle.

The stock just opened 35% higher – jumping from $184 to $222 – on news of an OpenAI partnership. But here’s the reality: Those earnings won’t materialize for years, if ever.

Remember Oracle’s similar pop a few weeks ago? It made Larry Ellison the richest man in the world. Then it came right back down.

We’re seeing textbook risk-on behavior:

• Small caps surging on Fed rate cut expectations (44% of Russell 2000 companies aren’t even profitable)
• Analysts raising Q3 earnings estimates throughout the quarter for the first time since 2021
• M&A activity accelerating across financials and beyond
• Even Boeing rallying on production promises it may struggle to keep

The takeaway? You need to be in this market. But you also need to protect your gains.

Click on the image below to discover why this risk-on rally demands both aggression and discipline.

Transcript

Hey, everybody. Shah Gilani here with your Monday Takeaways.

First off, as always, I’ll look backwards to last week.

Another record day on Wall Street. Yes, the S&P saw another record, and yes, the Russell 2000, another record high.

Why the Russell? Why is that important? Because it speaks to the likelihood of further rate cuts from the Fed. Bringing rates down is very beneficial to small caps because in the Russell 2000, about 44% of companies are not profitable.

They borrow to stay in existence for the most part and hopefully live long enough to start making enough money to earn something worthwhile to justify their existence and, hopefully, trickle down to the bottom line some profitability that makes their stocks worthwhile. In the meantime, the prospect that they’re able to extend their lives with lower rates and be able to borrow more cheaply and roll over their debt is the big deal. That’s what’s powering small caps. It’s not earnings that are powering the small caps. It’s certainly earnings that are powering the large caps and certainly the tech sector.

Believe it or not, we’ve got earning season for the third quarter starting to tick in. And it’s going to be interesting because analysts, for the first time, I think, since 2021, have been raising their estimates for third quarter earnings throughout the third quarter, which is very unusual. Most of the time, as a quarter actually progresses, analysts tend to lower earnings expectations, and the consensus for estimates drops during the quarter. This quarter for Q3, they did the opposite.

As the quarter was progressing, they were raising earnings estimates for companies that were about to report. Now, here they are about to report. We’ll find out. That created a lot of interest in these companies because now if the earnings estimates were rising, it justifies the higher multiples that a lot of these names were trading at. Because if the earnings fill in that portion of the P/E ratio, then the actual P/E ratios aren’t as high as people are afraid they are. They’re still high, but if earnings fulfill that expectation, then yes, those multiples are justified.

We’re about to find out. So my takeaway is earnings will be good. Those justifications will be evident, and folks will look out and say, “Well, we could probably see more in the fourth quarter. We could probably see more in 2026 because the Fed is going to cut. How about 2027?” Yes. So I think we’ll continue to see some multiple expansion.

That being said, the takeaway from all that is it’s risk-on, people, because traders and investors are expecting the best from the thing that matters the most, which is earnings growth, and that’s baked into a lot of numbers. Now if we don’t fulfill that, that’s a problem. But as an example of risk-on, here’s AMD this morning.

It’s pre-open here. The stock is up 35%. I’m looking at 35%, people. So it was down almost 3% on Friday, and now it’s way up here because this stock is going to open $50 higher – almost $60 higher – and it’s just gone through the roof.

Now, the recent high here for AMD, back on August 13, was an intraday high of $186.65. It closed at $184. It’s going to open up today at $222. Now to me, the expectation for the bottom line fall-through from a deal with OpenAI, which is what’s propelling AMD higher, is going to take years to manifest itself into net earnings.

So this is about risk-on, people. It’s not that there’s such a huge short position in AMD that caused shorts to cover. It’s just about “let’s get in.” Now the thing I’m going to say about that is the takeaway there is this is not like a lot of other stocks that popped on some news that there’s some OpenAI thing happening or some other chips thing is going to happen, or something’s going to happen with a partnership. You get these giant pops. But then the truth of the matter is, how long is it going to take for that news, whatever it is – for the partnership, whatever it is – for the expectation that we’re going to buy so many chips or that OpenAI is going to want to partner with you because you could build out their data centers – whatever it is, we don’t know how long it’s going to take to see these deals actually fall down to the bottom line, if they ever do.

Oracle, case in point. This move made Larry Ellison the richest man in the world. Now that’s come down. So Oracle on this crazy news a couple weeks ago pops like that and comes right back down.

Is AMD going to have the same kind of comedown? Yes, it is, people. So me, I’m not chasing AMD higher.

The takeaway for me is there’s a lot of fluff in this market and opportunity if you’re in these positions and you should be having a risk-on mentality. You should be here. It’s not about waiting for this to calm down and waiting for it to all reverse and to buy the dip. That’s going to take a while. It may take a year. It may take two years. It’s coming. In the meantime, you’re going to miss great opportunities.

And for me, that means casting a wider net in terms of stocks I want. Why? Because it’s risk-on time. That’s the takeaway from all this.

Again, I don’t want to say it’s risk-on to infinity and we’re never going to have a correction, but even Boeing has been performing decently. And believe me, the ability for Boeing to make a lot more in terms of earnings is staggering. Now they’re creating some positive news out there about increasing production considerably, which frankly, they’re going to have a hard time doing. So we’ll see the stock pump eventually if that news continues to circulate and people seem to think that, yeah, they can up their production.

Why am I bringing this up? It’s because everything from the Russell to large caps to industrials to banks – and we’re seeing some M&A, we’re seeing M&A across the board in a lot of areas, but we’re certainly starting to see some financial M&A, bank M&A. And here we go. This is the Russell making a new high last week.

This is the Spider, the XLF, and this is proof positive that there are leadership groups continuing to go higher. It doesn’t matter if you have this nice steady move or if you have these crazy moves – it’s risk-on. So the takeaway from all this is be long, be in the markets, but make sure you don’t give your profits back because at some point, we’re going to have a nasty correction. At some point, we’re going to have a bear market. At some point, this bubble, this AI bubble – it’s not about the narrative. It’s not about what AI can do. It’s about the fact that not all stocks, not all boats are going to rise with the tide. And a lot of the AI story now is being driven by two companies: Nvidia and OpenAI.

If either one of them doesn’t perform and all of the deals attached to them and expectations attached to them could bring down the whole edifice. So my takeaway for you all is ride the tiger. Just be aware they can turn around and bite you.

Catch you guys next week. Cheers.