Stack Overflow's AI-Led Revenue Surge, Market Bubble Signals, and US Job Concentration

Key Takeaways

1. Stack Overflow's monthly questions dropped from 300K to near zero, yet revenue doubled to $115M+ by licensing data to AI labs and launching an enterprise AI product.
2. Analysts justify high stock valuations by pushing earnings forecasts to 2030-2040, a sign of bubble phase 4 per Asness.
3. 60% of US job growth in the past 3 months came from healthcare/social assistance and leisure/hospitality only.
4. The top 1% now hold more wealth than the entire US middle class.

1. AI and Business Model Transformation

1. Stack Overflow saw monthly questions collapse from 300,000 to near zero, but annual revenue doubled to over $115 million. The turnaround came from licensing its human-answer database to AI labs and launching "Stack Internal," a GenAI enterprise product based on its Q&A data, now used by 25,000 companies. — via 1

2. Market Valuation and Bubble Indicators

1. Clifford Asness highlighted an analysis showing how analysts "politely" abandon present value formulas during bubbles: to set target prices ~15% above current levels, they push earnings forecasts to 2030 or even 2040 and raise long-term growth rates. The sum of long-term growth projections for individual stocks far exceeding macro GDP growth is a good proxy for Phase 4 of a bubble. — via 1 2
2. Asness also shared a 12-step model of the bubble life cycle, noting the market is rapidly progressing through those phases now. — via 1
3. Asness pushed back on claims that rising stock-bond correlation destroys 60/40 portfolios, arguing that bond volatility is much lower than stocks, so the 40% allocation mainly dilutes risk rather than diversifies. True diversifiers like trend-following and market-neutral equities are more effective. — via 1

3. US Economy: Jobs and Policy

1. Charlie Bilello reported that over the past 3 months, 60% of all US job growth came from just two sectors: healthcare and social assistance (+198K) and leisure and hospitality (+144K). — via 1
2. Bilello also cited White House NEC Director Kevin Hassett, who sees room for rate cuts and hopes new Fed officials will push that view. — via 1
3. Lyn Alden noted that the top 1% of US earners now own more wealth than the entire middle class. — via 1