The largest companies in the S&P 500 are seeing their market weight surge faster than their actual earnings — a growing imbalance that’s starting to raise eyebrows on Wall Street. Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, has often dismissed talk of an AI-fueled market bubble. Yet in her latest report shared with MarketWatch, she pointed to one chart that’s giving her some concern. It compares the top 10 stocks’ weighting in the S&P 500 to their share of total corporate profits. According to Calvasina, those companies now make up more than 44% of the entire index — the highest level since at least 1990 — while accounting for just 34.3% of total net income. That nearly 10-point gap echoes levels seen at the height of the dot-com bubble in 2000. “While we haven’t agreed that the market is in an AI bubble like the old TIMT era, the risk has definitely grown,” she said, referring to the Technology, Internet, Media, and Telecommunications boom that preceded the early 2000 crash. The top 10 stocks — including Nvidia, Meta, Broadcom, Microsoft, Amazon, Alphabet (both share classes), Apple, Tesla, and Berkshire Hathaway — dominate the AI narrative. Apart from Berkshire, all are deeply tied to the technology driving the latest market enthusiasm. This trend isn’t entirely new. Since 2021, the biggest companies’ market weight has consistently grown faster than their earnings share, fueled by investor optimism about long-term AI-driven growth — especially since ChatGPT ignited the frenzy in late 2022. But lately, that gap has been widening even faster. The imbalance has resurfaced bubble talk, particularly after recent earnings from AI heavyweights. Meta’s stock plunged last week, wiping out over $200 billion in market value as investors balked at its expanding AI spending plans. Still, strength from other tech giants — most notably Amazon — has helped offset the declines. Amazon’s latest deal to provide cloud power to OpenAI added fresh fuel to the market rally as November began. By Monday’s close, the S&P 500 and Nasdaq finished higher, while the Dow and Russell 2000 slipped modestly — a reminder that Wall Street’s momentum remains powered by its biggest, most AI-focused names.

Nvidia Rides Big Tech’s AI Spending Wave The AI race among Big Tech giants is intensifying — and Nvidia looks like the biggest winner. After Amazon’s strong cloud results and upbeat guidance last week, Wall Street’s attention shifted to Nvidia, which hasn’t even reported earnings yet. The surge in AI spending from Amazon, Meta, Alphabet, and Microsoft points to a flood of demand for Nvidia’s chips and computing power. “Companies are going to keep spending on compute,” said Matt Stucky of Northwestern Mutual. “And Nvidia is the best supplier in the market right now.” Big Tech Opens the Wallet Meta now expects to spend $70–72 billion on capital projects this year, nearly double its 2023 total. Amazon plans to invest $125 billion, while Alphabet lifted its capex target to $92 billion. Microsoft, meanwhile, is forecasting even faster spending growth than last year’s already massive 58% jump. All those billions are flowing into AI infrastructure — and straight toward Nvidia’s ecosystem. CEO Jensen Huang recently hinted that analysts are underestimating the company’s growth potential by about $100 billion, suggesting Nvidia could generate well over $300 billion in data-center revenue next year. Bubble or Boom? With AI investments skyrocketing, some on Wall Street are questioning if we’re in a bubble. The main concern is whether companies like OpenAI can monetize their technologies fast enough to justify the spending. “For every dollar OpenAI takes in, $2 goes out the door,” Stucky noted. Still, confidence remains high — Oracle’s recent bond sale to fund OpenAI infrastructure was heavily oversubscribed, signaling continued investor optimism. Market Perception Shifts While Nvidia remains the core beneficiary, Amazon’s resurgence is reshaping investor sentiment. Its cloud business accelerated to over 20% growth in Q3, reinforcing its leadership in AI infrastructure. Investors seem more comfortable with heavy AI budgets at Amazon and Alphabet than at Meta, given that the hyperscalers can directly monetize compute services. Meta, on the other hand, relies on advertising and longer-term AI ambitions that may take years to pay off. As Mizuho’s Jordan Klein put it, many investors may “look elsewhere for near-term catalysts,” but Nvidia and the major cloud providers still stand at the center of the AI gold rush.

AI-Fueled Market Euphoria Faces Test as Tech Spending Turns to Debt The stock market’s AI-driven rally is showing signs of strain. With megacap tech companies steering market direction, this week’s earnings have brought volatility — and fresh worries that investor optimism may be overextended. Disappointing results from Meta (-11.33%) and Microsoft (-2.92%) sparked a broad selloff Thursday, while Amazon (-3.23%) and Apple (+0.63%) helped stabilize futures on Friday. The whipsaw action reflects how sensitive investors have become to any weakness in the AI narrative powering today’s exuberance. Among those flashing warning signals is Michael Burry, the famed “Big Short” investor. Posting on X, Burry wrote: While often seen as a pessimist, Burry’s trading history shows nuance. Scion Asset Management’s filings have alternated between bullish and defensive stances — from long positions in Alibaba, Baidu, and JD.com, to put options on Nvidia, and later calls on Meta, ASML, and UnitedHealth. His next quarterly filing, due in mid-November, may reveal whether his tone has turned defensive again. What’s fueling this growing caution is a notable shift in how Big Tech is funding AI investments. Until recently, the AI spending surge was largely powered by cash flow — a reassuring sign of financial discipline. But Meta’s $30 billion Hyperion data center project in Louisiana marks a turning point. The company used a special purpose vehicle (SPV) to issue most of the debt, keeping it off Meta’s balance sheet and preserving its credit rating. This kind of off-balance-sheet financing — dubbed “quantum debt,” because it’s both present and hidden — has raised eyebrows. If other tech giants follow suit, it could introduce new layers of financial risk into an already overheated market. Reports from Bloomberg and the Financial Times indicate Meta may also be exploring a $25 billion bond sale, reinforcing the trend. As the AI gold rush shifts from cash to credit, investors are asking a crucial question: Is this innovation-fueled rally sustainable — or the early stage of another bubble?