AI Stocks Have Fueled the Bull Market for 3 Years—Will the Momentum Continue?

Core Insights - The U.S. stock market is nearing record highs, primarily driven by the surge in AI-related stocks [2][4] - The majority of top-performing S&P 500 stocks this year are linked to the AI boom, with companies like Seagate Technology and Western Digital seeing their shares nearly triple in value [3][4] - The "Magnificent Seven" stocks, which represent one-third of the S&P 500, are significantly influencing the broader market's performance [4][6] AI Market Dynamics - The AI boom is identified as the main driver of the recent bull market, with investment portfolios increasingly reliant on AI stock performance [4][7] - Major tech companies are expected to report substantial capital expenditure (CapEx) increases, with estimates for hyperscalers' infrastructure spending rising to $490 billion [8][9] - The circular investment model among AI companies, where they invest in each other, is evolving, but poses risks if the business environment changes [10][12] Investment Sentiment and Risks - Despite concerns about a potential AI bubble, investor sentiment remains strong, with tech companies demonstrating sufficient benefits from AI to maintain confidence [12][13] - The AI sector is not currently financed by debt, which differentiates it from previous market bubbles, providing a more stable foundation for growth [13] - However, there are ongoing worries that negative developments could quickly shift investor sentiment, impacting stock valuations [12][13]