The US stock market saw historic gains earlier this month, with trillions of dollars worth of inflows. However, a majority of the growth came from a handful of companies. In fact, AI (Artificial Intelligence) stocks have been the driving force for the S&P 500 over the last few years. Nvidia (NVDA), in particular, has propelled the US stock market many fold in the last two year, or in other words, since the advent of AI. Let’s look at the S&P 500 without AI stocks.
US Stock Market Without AI
According to a recent report, the S&P 500 rose by 142% From May 2024 to May 2026. However, if we exclude AI companies, the remaining market grew by just 16%. The diverging figures highlight how a handful of AI-based companies are driving the US stock market surge in recent years.
AI has been in the spotlight for the last two years, and demand for AI products have surged significantly. While the stock market surge has been commendable, many worry that the upswing is dangerously dependent on the artificial intelligence sector.
Michael Burry, the stock market expert who predicted the 2008 housing crisis, and was portrayed by Christian Bale in The Big Short movie, is also quite concerned about the AI-driven market surge. Burry likens the current AI-based scenario to that of the final stages of the dot-com bubble of the late 1990s. Burry stated in a Substack post, “Stocks are not up or down because of jobs or consumer sentiment. They are going straight up because they have been going straight up. On a two letter thesis that everyone thinks they understand. Feeling like the last months of the 1999-2000 bubble.“
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While it is unclear if we are actually in an AI stock market bubble, it would not hurt to be cautious. Investors should take steps to hedge their investments, especially given the larger macro and geopolitical uncertainties.