Core Insights - Spending on AI infrastructure is projected to reach between $3 trillion and $4 trillion by the end of the decade, indicating significant investment in this sector [2] - The S&P 500 achieved a total return of 18% in 2025, marking its third consecutive year of double-digit gains, largely driven by the AI boom [1] Investment Sentiment - There are concerns about a potential AI bubble in 2026, fueled by the substantial capital being allocated to AI infrastructure without corresponding returns on invested capital [2][3] - Only 3% of users currently pay for AI services, suggesting that the market may not yet be fully monetized [3] - High valuations, such as Palantir Technologies trading at a price-to-sales ratio of 110, reflect the hype surrounding AI [4] Long-term Investment Strategy - Despite fears of an AI bubble, it is recommended that investors consider long-term investments, particularly in the Vanguard S&P 500 ETF, which has a low expense ratio of 0.03% [5] - Historical data indicates that the S&P 500 generally produces positive annualized returns over long periods, making it less concerning to buy at all-time highs [7] - Investors are advised to avoid market timing and continue investing consistently, as the Vanguard S&P 500 ETF remains a strong option [8]
With Fears of an AI Bubble in 2026, Is It Still Smart to Buy This Top S&P 500 ETF?
The Motley Fool·2026-01-30 05:45