Raoul Pal Says Stock Prices Keep Rising Because of Currency Debasement While AI Earnings Go “Vertical”

While most investors are still debating whether markets are overvalued, macro investor Raoul Pal says they may be completely missing the real story driving the next phase of the economy: artificial intelligence.

According to Pal, traditional recession models and old business-cycle frameworks are struggling to explain what is happening because the economy is now splitting into two completely different worlds. One side remains tied to slower industrial production and traditional economic activity, while the other side, the AI and intelligence economy, is accelerating at a historic pace.

Why Old Macro Models Are Breaking

Pal argued that many analysts are still using outdated frameworks to predict recessions based on weakening industrial indicators like the ISM. But he says those indicators no longer reflect the full economy.

One part of the economy is slowing modestly, while AI-driven businesses are expanding at extraordinary speed. That divergence is creating what he described as a “bifurcation” in markets and economic data.

According to Pal, this is exactly why some major recession calls over the last three years have failed to materialize despite weaker manufacturing data.

The AI Revenue Explosion

The biggest example Pal pointed to was Anthropic.

He described the company’s revenue growth as “the fastest scaling of any company in history,” claiming Anthropic went from essentially zero revenue to nearly $100 billion within roughly three years. Most of that growth reportedly came in the last year alone, jumping from around $10 billion to $100 billion.

Pal said nothing in modern corporate history has come close to that kind of acceleration.

That explosive growth, he argues, is changing how investors should think about stock valuations, earnings growth, and macroeconomic cycles.

Why Stock Prices Keep Rising

Pal also addressed growing concerns around high equity valuations.

He explained that monetary debasement naturally pushes asset prices higher over time, especially stocks. Normally, earnings growth tends to follow GDP growth at a slower pace. But AI companies are now breaking that pattern entirely because their earnings growth is moving “vertical.”

That combination of currency debasement and rapidly expanding AI earnings is creating a market environment unlike previous cycles.