Wall Street is rewriting the rules of the modern stock market. High valuations once seen as dangerous are now being viewed through a new lens. Artificial intelligence and strong corporate earnings are reshaping expectations. The result? What looked expensive a decade ago may be the new fair value. Investors are adapting to a world where Big Tech and AI drive both growth and investor sentiment.
Stock Market Valuations: High, but Here to Stay
The S&P 500 continues to trade near record highs, with valuations echoing levels last seen during the dot-com boom. Yet many strategists argue this time is different. Bank of America’s Savita Subramanian says investors should accept today’s elevated multiples as “the new normal.” The reason lies in rapid AI adoption and resilient earnings growth from top companies.
Over the past five years, Big Tech’s rise has changed how analysts measure value. Compared with long-term averages, the index looks pricey. But when adjusted for recent trends, the premium shrinks dramatically. The stock market’s structure has evolved, and today’s megacaps deliver both strong profits and innovation. That makes higher prices more defensible than during past bubbles.
Big Tech and AI: A Shifting Power Balance
AI has transformed Big Tech from a small group of innovators into the core of global markets. The so-called “Magnificent Seven” — Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, and Tesla — powered over half of the S&P 500’s rally since 2023. But momentum is shifting.
New players like Broadcom, Oracle, and Palantir are now emerging as serious AI contenders. Oracle’s stock has soared more than 75% in 2025, fueled by demand for AI-driven cloud services. Palantir has surged 135%, becoming the Nasdaq 100’s top performer. As AI spreads across industries, investors can no longer focus only on the original seven. The stock market’s next wave of growth may come from these rising stars.
Stock Market Indices Expand Beyond the Magnificent Seven
Wall Street is catching up to this broader AI boom. Cboe Global Markets recently launched the “Magnificent 10 Index,” adding Broadcom, Palantir, and AMD to the original seven. The inclusion signals a shift toward a more diverse set of AI leaders. Oracle’s strong results further highlight how the AI story is no longer limited to Big Tech alone.
Index makers are formalizing this evolution based on clear criteria: liquidity, market value, and AI leadership. Companies like Taiwan Semiconductor, Micron, and Arista Networks are also gaining recognition as vital parts of the AI ecosystem. The new stock market reality rewards firms that enable AI infrastructure, not just those that deploy it.
AI’s Broad Reach: From Software to Semiconductors
The AI boom now touches nearly every corner of the stock market. Beyond Big Tech, firms in energy, memory, and networking are benefiting from soaring demand. Arista Networks leads in high-speed connections, while Micron and Western Digital supply the chips and storage powering AI models.
Even as AI leaders multiply, challenges remain. Apple faces questions about its AI strategy, while Tesla contends with a crowded EV market. Yet both still command loyal investors betting on long-term innovation. Meanwhile, some key AI players — like OpenAI, Anthropic, and SpaceX — remain private, reminding investors that the full AI opportunity is even larger than what’s listed on exchanges.
Rethinking Strategy: Staying Invested Amid Uncertainty
High valuations often spark fears of bubbles, but history shows markets can rally for years beyond such warnings. In the late 1990s, Alan Greenspan’s “irrational exuberance” speech came well before the dot-com peak. Those who stayed invested saw massive gains before the crash.
Today’s investors face a similar dilemma. Timing the top is risky, and sitting out could mean missing years of AI-fueled growth. As earnings continue to rise and innovation expands, the stock market may sustain its elevated levels longer than skeptics expect. For now, AI remains the engine — and Big Tech, along with its new challengers, are steering the course.