---
title: "The Federal Reserve's interest rate cut expectations have sparked a speculative bubble, with a high-risk rebound sweeping through unprofitable tech stocks"
description: "Due to market expectations that the Federal Reserve will continue to lower interest rates, some high-risk technology stocks have risen significantly, with the stocks of unprofitable technology compani"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/258711446.md"
published_at: "2025-09-24T12:47:04.000Z"
---

# The Federal Reserve's interest rate cut expectations have sparked a speculative bubble, with a high-risk rebound sweeping through unprofitable tech stocks

> Due to market expectations that the Federal Reserve will continue to lower interest rates, some high-risk technology stocks have risen significantly, with the stocks of unprofitable technology companies tracked by UBS rising 21% since the end of July. However, this rise has raised concerns that it may lead to investor losses. Experts point out that this is a "junk rebound," with extremely high risks, and a strong atmosphere of retail speculation, which may end in disillusionment. In the current outlook of interest rate cuts, speculative activities in other sectors are also increasing

According to the Zhitong Finance APP, due to market expectations that the Federal Reserve will continue to lower interest rates, some high-risk technology stocks have seen significant increases. However, this rise has raised concerns, as these stocks may quickly decline if the Federal Reserve's interest rate policy or market expectations change, leading to substantial losses for investors.

A basket of unprofitable technology company stocks tracked by UBS has risen 21% since the end of July, while profitable technology company stocks have only increased by 2.1%, and the Nasdaq 100 index has risen by 5.9%. This round of increases has pushed the stock prices of a basket of unprofitable technology companies, including SoundHound AI (SOUN.US) and Unity Software (U.US), close to their highest levels since the end of 2021—when interest rates were at their lowest and speculative asset bubbles burst the following year.

![image.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250924/1758717469141549.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Figure 1

On Tuesday, the risk of a hard landing in the stock market became evident, with the sector falling 2.1%, underperforming the broader market. Earlier, Federal Reserve Chairman Jerome Powell reiterated that policymakers face a difficult path when weighing further rate cuts. Even if the Federal Reserve continues to cut rates twice this year, the benchmark rate may remain above 3%, far from the zero interest rate policy during the pandemic.

Ted Mortensen, a technology strategist at Robert W. Baird with over 30 years of Wall Street experience, pointed out that this is a "junk rebound," a phase of speculative over-exuberance driven by expectations of a rate-cutting cycle leading to a "revival of animal spirits." He believes that this rebound has obvious bubble characteristics and extremely high risks, with the retail speculation atmosphere on Reddit and Robinhood making it as uncertain as a casino, ultimately likely to end in disillusionment.

Mortensen also emphasized that analyzing the value of loss-making companies based on possible actions by the Federal Reserve is "extremely tricky" in the context of persistent inflation and the negative impact of artificial intelligence on the labor market.

Lowering borrowing costs is particularly important for loss-making technology companies, which need to finance their rapidly growing businesses, with valuations based on profit expectations that may take years to realize. In the current outlook for interest rate cuts, speculative activities in other areas of the stock market are also relatively active: high-risk biotech stocks have surged, and the Russell 2000 small-cap index has set a record for the first time since 2021, but technology stocks have been particularly prominent.

The unprofitable investment portfolio tracked by Goldman Sachs has nearly doubled since its low in April, recently reaching its highest level since February 2022.

Specifically, OpenDoor Technologies Inc., touted as a "meme stock" by Canadian hedge fund manager Eric Jackson, has seen its stock price soar over 280% since the end of July; quantum computing company IonQ Inc. has risen over 80% during the same period, while SoundHound AI, Xometry Inc., and Lemonade Inc. have all increased by over 50% Despite the recent rebound, the gains still pale in comparison to the early 2000s—Goldman Sachs' portfolio surged over 420% from March 2020 to February 2021, but most of those gains receded over the following 15 months. However, the current portfolio is still about 50% lower than its peak in 2021.

![image.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250924/1758717486212583.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Figure 2

Some investors believe the recent rally is justified. Anthony Saglimbene, Chief Market Strategist at Ameriprise Financial Services Inc., pointed out that the technology sector has higher earnings visibility than other sectors, artificial intelligence presents a unique long-term benefit, and the interest rate environment is relatively favorable. Therefore, it is not surprising to see more risk-taking in speculative areas, as speculation is indeed a source of untapped upside potential.

However, he also emphasized that the rally in unprofitable tech stocks could easily reverse. If the economy experiences a broader recession, such stocks may face greater pressure than quality stocks. He further stated that the Federal Reserve may continue to be cautious about the interest rate path; if it begins to cut rates more aggressively, it could indicate economic problems, which would not bode well for high-risk or unprofitable tech assets. "Those who survive by the sword may also die by the sword."

## Related News & Research

| Title | Description | URL |
|-------|-------------|-----|
| 索羅斯逆市加碼微軟及 Nvidia 等科企 新買入黃金股 清倉 4 隻股份 | 索羅斯基金管理公司在 2022 年第四季度加大對微軟、英偉達和蘋果等大型科技股的投資，同時增持黃金股以對衝風險。基金還增持了 Atlassian、Salesforce 和 Uber 等軟體公司股票，但大幅減持了 Snowflake 和 Ci | [Link](https://longbridge.com/en/news/275990619.md) |
| 東和製藥（TSE:4553）在 2026 年第三季度利潤率的堅挺強化了其防禦性收益的説法 | 東和藥品（TSE:4553）公佈了 2026 年第三季度的穩健業績，收入為 736 億日元，淨利潤為 89 億日元，反映出同比增長 11.2% 的盈利增長和 7.9% 的淨利潤率。儘管這些數據積極，但未來的盈利預計年增長率僅為 0.89%， | [Link](https://longbridge.com/en/news/275991027.md) |
| 每千次展示 60 美元！OpenAI 用高價拉開 “AI 廣告” 大幕 | 為應對 AI 鉅額開支，OpenAI 正式測試廣告，CPM60 美元起步、最低投入 20 萬美元，定位高端渠道，直接挑戰谷歌萬億美元市場，WPP 等頂級代理已率先合作。但轉型風險並存：需平衡用户信任，承諾不用私聊數據；對手 Anthropi | [Link](https://longbridge.com/en/news/275993077.md) |
| Haypp 集團（OM:HAYPP）1.6% 的利潤率對樂觀的盈利敍述構成挑戰 | Haypp Group (OM:HAYPP) 報告了 2025 年第三季度的收入為 9.626 億瑞典克朗，每股收益為 0.15 瑞典克朗，過去十二個月的收入為 37.5 億瑞典克朗，每股收益為 1.94 瑞典克朗。淨利潤率上升至 1.6% | [Link](https://longbridge.com/en/news/275991264.md) |
| 伊朗部長向 BBC 表示，伊朗願意做出妥協以達成與美國的核協議 | 伊朗副外長馬吉德·塔赫特 - 拉萬奇表示，伊朗願意為與美國達成核協議作出妥協，但前提是討論解除制裁的問題。他確認在阿曼進行的初步積極討論後，將在日內瓦進行第二輪談判。伊朗願意討論限制其核計劃，但不會將其與導彈發展等其他問題掛鈎。美國代表團， | [Link](https://longbridge.com/en/news/275997789.md) |

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.