By Jim Edwards
Publication Date: 2025-11-19 10:00:00
This, in a nutshell, is the narrative of the entire global stock market right now and the conundrum that no tech CEO or asset manager can avoid addressing: Is AI a bubble or not?
Much is at stake.
Since the current bull market began in October 2022, roughly 75% of gains in the S&P 500 have come from just seven stocks—Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia, and Tesla. Those companies, known as the Magnificent Seven, have a combined market cap of about $21.5 trillion as of mid-November.
Their strategies, Apple’s perhaps excepted, are heavily dependent on AI. But if AI does not deliver the revenues or the efficiencies that Big Tech expects, the fallout in stocks will likely be severe—because the world’s investable assets are currently concentrated in AI and AI-adjacent stocks to an unprecedented degree.
The S&P 500 has risen 14.7% this year, repeatedly breaking new record highs. But 40% of the index’s value comes from the 10 biggest stocks within it, all but one of which are tech companies.
Most of those companies, in turn, are pouring vast sums into AI for the development of new data centers, large language models, and the massive amounts of electricity they guzzle. Goldman Sachs estimates that capital expenditure on AI will hit $390 billion this year and increase by another 19% in 2026. Bank of America is even more bullish: It projects that AI capex will hit $1.2 trillion in 2030.
The recipients of the lion’s share of that money are 10 AI companies…