AI-related equities pushed the S&P 500 and Nasdaq to new record highs this week [1, 2].
This surge indicates a growing divide between market participants and financial analysts regarding the sustainability of the artificial intelligence trade. While some fear a market collapse, others view the current momentum as a catalyst for unprecedented growth.
The Nasdaq closed at a record high on Wednesday, May 8, 2026 [2]. This rally has been building since a low point in April 2025, with AI-related gains adding nearly 50 percent to the S&P 500 during that period [1].
Market participants are largely ignoring warning signs from high-profile analysts. Michael Burry said the AI stock rally echoes the dot-com bubble and is dangerous [4]. Despite such warnings, some investors continue to increase their positions. Paul Tudor Jones said these are crazy times and he is buying more AI stocks [2].
BCA Research predicts a potential 30 percent stock-market rally driven by AI [3]. This perspective suggests the current trend may be a late-stage melt-up, a phenomenon where prices rise rapidly due to fear of missing out, that could still deliver further gains before a correction [3].
Investors continue to prioritize expected strong earnings and the role of AI as a growth catalyst over the risk of a bubble [2, 3]. The concentration of gains in a few tech-heavy indices has created a market environment where AI performance dictates the broader health of U.S. equity markets [1, 2].
“AI-related gains adding nearly 50 percent to the S&P 500”
The current market trajectory suggests that investor appetite for AI growth is outweighing traditional valuation metrics. By ignoring bubble warnings in favor of momentum, the market is essentially betting that AI will deliver productivity gains similar to the internet revolution, though the risk of a sharp correction increases as prices decouple from historical norms.
