Dan Niles says he's currently bearish on the markets due to the Fed starting what he sees as a interest rate hiking cycle. Another central point of concern came Thursday when reports signaled OpenAI's annualized revenue will be $20 billion less than expected. Dan explains how the lower revenue expectations for the pre-IPO company creates a unique bear case for Meta Platforms (META), Amazon (AMZN), Alphabet (GOOGL) and other Mag 7 firms. It's a different case for Treasury yields, where Dan sees a bull case forming amid a slew of economic and macro headwinds.
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What Dan Niles said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
Dan Niles said he is bearish, citing his rules of not fighting the Fed or the bond market. He noted the bond market has seen rates push higher, with the Fed likely to raise in October due to six months of above-target inflation. Niles highlighted mixed signals in the AI trade, including a pulled Nvidia-backed IPO in Australia, a failed data center deal, and OpenAI's revenue reportedly being $50 billion rather than $70 billion. He discussed the top ten S&P 500 stocks being about 40% of the index, and contrasted bullish signs like agentic AI with bearish data on token pricing and the RAMP index showing spending down 11% since August 2nd. Niles warned of over-earning at AI companies, noting unusual 80% operating and gross margins, and suggested bonds at 5-6% yields offer a risk-free alternative, with market cap to GDP at record highs. He expects the bubble to break in about a year, with debt costs potentially squeezing neo-clouds.
Key takeaways
Niles is bearish, refusing to fight the Fed or bond market amid rising rates and expected October hike.
OpenAI revenue is reportedly $50 billion, not $70 billion, a significant discrepancy in AI trade signals.
RAMP index AI spending fell about 11% over the last two months after rising 9x earlier in 2026.
Top ten S&P 500 stocks represent about 40% of the index, driving overall market moves.
Niles expects the current bubble to break in about a year, not immediately.
Numbers and commitments
Figure
What it refers to
Type
At
$70 billion
Reported AI revenue figure for OpenAI, now said to be $50 billion
Move to the upside, so a bit of a mixed picture in the apparel space. But let's shift gears here, bring Sam back into the conversation and turn our attention to the macro environment. Bring in our guest, Dan Niles, founder of Niles Investment Management. Dan, thank you for being with us today. I was looking through some of your recent calls, and you had some that were spot on. Being bullish in late July, you became more cautious in August. As we sit right now with the S&P just right near record highs, looking at the markets, are you bullish? Are you bearish? Are you somewhere in between right now?
I would say I'm bearish because I have sort of simple rules: I don't fight the Fed and don't fight the bond market. And we've seen the bond market continue to go up and rates keep pushing higher. And the Fed's going to raise in October, but they're on more of a hiking cycle because at the end of the day, for six months, inflation has been above their target, and they're focused on that. So I think between those two things and the elephant in the room, which I'd argue, mixed messages coming out of the AI trade, such as the firm's IPO, which was backed by Nvidia in Australia, got pulled. That data center deal is not going to get done. And today you found out that that 70 billion AI number for OpenAI actually is 50 billion, which is a pretty big difference. And so I think you have to be looking at all of that and sort of take this day by day, because there are a lot of, you know, crosscurrents going on.
Yeah. But for today, Dan, good afternoon to you. It's really hit a nerve with the market. I mean, what is your take on what we've just heard reportedly about the AI trade, which this market is hinging on right now, particularly because we've actually just seen the Dow and the Russell turn positive. I mean, it's really exacerbated the rotation we had been looking at earlier this morning.
Well, I mean, the top ten stocks in the S&P 500 — the top ten stocks are about 40% of the S&P 500. So this is really what's driving the overall headline number. And semiconductors are sort of at the tip of that spear. The thing that people should be focused on, there are two things. If you're bullish, you say, well, agentic AI really showed up on July 30th with OpenClaw, and then you had Meta introduce Muse, and then that really took off. It's been running Apple now for a couple of weeks, and people are really getting excited about it. So that's the bullish side. The bearish side is if you look at the data. And one of the things that people have focused on is open-weight models cutting and putting price pressure on what you can charge per token. And if you look at like the RAMP index, which I think is pretty good, you can see that spending has been up about 9x from the beginning of the year through about August 2nd, but from August 2nd on, if you add it up, it looks like the spend for both of them has gone down about 11% over the last two months. So you look at that and you go, maybe the amount of tokens being produced is not growing faster than the price pressure that we're seeing. Then you get this news that, you know what, the revenue figures are 50 billion, not 70. And you have to start thinking about it. And, you know, forget today, Micron's down from when they reported a write-beat-and-raise quarter. It's a similar situation, though they actually came in light. The numbers obviously spectacular, but at the end of the day they were below street expectations. Those are all things that you have to work into this because these companies, I think everybody who's been doing this a long time knows that they're over-earning. You don't necessarily have multiples out of control, but what you do have is earnings out of control relative to what they should be, in the sense that you don't see 80% operating margins at memory companies. You don't see 80% gross margins even at these companies. And yet some investors who are hyper-bullish are thinking this is going to continue for the next several years. And I just don't think that's going to be the case. So you have all of these things coming together all at once, which is why I think you have to be pretty nimble. And that's why we've, you know, moved back and forth in terms of our thoughts based on what's going on with the AI trade over the course of the year.
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Niles, D. (2026, October 8). Dan Niles Tilts Bearish: How OpenAI Revenue Revision & Treasury Yields Tell Same Story [Interview transcript]. Schwab Network. CEOInterviews.AI. https://ceointerviews.ai/interview/3091593/
MLA
Dan Niles. "Dan Niles Tilts Bearish: How OpenAI Revenue Revision & Treasury Yields Tell Same Story." Schwab Network, 8 Oct. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/3091593/.
BibTeX
@misc{niles2026_3091593,
author = {Dan Niles},
title = {Dan Niles Tilts Bearish: How OpenAI Revenue Revision \& Treasury Yields Tell Same Story},
howpublished = {Interview transcript, Schwab Network. CEOInterviews.AI},
year = {2026},
month = {oct},
url = {https://ceointerviews.ai/interview/3091593/},
note = {Speaker-attributed transcript with timestamps}
}
