The S&P 500’s (^GSPC) rebound looks a lot thinner once AI enablers are stripped out.
The S&P 500’s latest rally is less broad than the headline index suggests. A Goldman Sachs index that excludes artificial intelligence enablers is slightly lower since late February, while the S&P 500 is up about 10% and AI winners have surged over 45%.
That makes this less a simple “bull market” story than a concentration story. AI is not just leading the tape — it is carrying a growing share of the index’s gains.
Concentration has been one of the defining features of this bull market since the Magnificent Seven label, referring to Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA), took hold in 2023. Back then, the story was a handful of megacap tech stocks dragging the index higher while much of the market lagged behind.
The latest turn is more thematic. It is no longer just about seven giant stocks. It is AI infrastructure, AI software, power-hungry utilities, industrial suppliers, and the companies investors see closest to the spending boom.
Jim Bianco of Bianco Research has pushed the argument further, writing that “we have not seen the market this concentrated around a single theme in 150 years.”
His historical comparison is the railroad boom of the late 19th century — a period when one transformative technology dominated capital markets because it was reshaping the economy itself. “The railroads literally transformed this country, and no other technology has had this potential until AI,” Bianco wrote.
Bianco Research put numbers around that dominance. Using a JPMorgan list of 41 AI-related stocks, the firm showed those names now account for nearly half of the S&P 500’s market value.
That does not make the concentration risk harmless. It makes the timing harder.
“Is this a bubble? Probably,” Bianco wrote. “But the more important question” is where investors are in the bubble cycle.
His late-1990s comparison is the cautionary tale for both bulls and bears. Investors who treated Alan Greenspan’s December 1996 “irrational exuberance” warning as the exit signal would have missed a nearly 300% Nasdaq rally before the dot-com peak.
For now, the S&P 500’s message is simple: As long as AI leadership holds, the rally can keep looking strong. If AI enablers fade, the index may have less support underneath than the headline level suggests.
Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.
