Warren Buffett has been worried about the stock market for some time. Indeed, the legendary conglomerate he and Charlie Munger built, Berkshire Hathaway, has been a net seller of stocks for 14 consecutive quarters.
As a result, Berkshire’s now sitting on nearly $400bn in cash!
Last weekend, the ‘Oracle of Omaha’ warned again about the current stock market. In an interview with CNBC, he said we’ve never had “people in a more gambling mood than now“. He likened today’s market to a “church with a casino attached“.
A casino! What should I do as an investor if Buffett is correct? Here are my thoughts.
Is there a casino?
Looking around the market, it’s not hard to spot the speculation that Buffett is referring to. Outside of crypto, the two most obvious areas to me are in the AI infrastructure buildout and the space sector.
When I mention the AI buildout, there are two parts to that. There are leading chipmakers like Nvidia, Micron and AMD whose profits are absolutely skyrocketing, thereby justifying much higher share prices (at least in the short-to-medium term).
On the other hand, there are smaller, more speculative stocks that have piggybacked on this powerful theme. For instance, Ceres Power (LSE:CWR) is up 949% in the FTSE 250 in just the past year!
The massive expansion of AI data centres has created a need for reliable on-site power. And because traditional power grids often can’t keep up, companies are turning to fuel cells.
Ceres is a fuel cell technology company. In this sense then, the excitement makes sense.
However, Ceres is also unprofitable, with just £60m in revenue expected this year. This translates into a forward price-to-sales (P/S) ratio of 24.
I found this stock quite interesting last summer at 150p. However, now at 725p, I think Ceres is very much part of the casino that Buffett is talking about.
Speculative space
Space is another exciting growth market that has turned very speculative in 2026. We can see this with the extraordinary $1.75trn valuation that SpaceX is hoping to achieve this summer.
The rocket pioneer now has a division called SpaceXAI, so it combines both space and AI in one investment. Again though, this has driven most other space-related stocks to speculative levels.
Rocket Lab (NASDAQ:RKLB) is one. As a vertically integrated space company, this is the closest listed comparison to SpaceX.
Hence why the stock’s up roughly 2,431% in three years — including a 21% surge today (8 May).
Rocket Lab is growing like gangbusters. In Q1, revenue surged 63.5% to $200.3m, while the backlog of work grew to a record $2.2bn. It sold more rocket launches in Q1 than in the full year 2025!
The stock has been on my watchlist for some time. However, the forward P/S multiple is around 64, which I don’t think offers me much value. I think I’ll get the stock much cheaper in future if I’m patient.
Sticking to the church
If parts of the Nasdaq resemble a casino, then the London Stock Exchange is still a church, with a lot of value on offer. And perhaps because of my age, I much prefer visiting a quiet cathedral these days to a glittering casino.
So the UK is where I’ll focus my attention in May.
