As stocks sit near all-time highs, strategists are shrugging off concerns about an AI bubble.
At least for now.
The S&P 500 ( ^GSPC ) is on pace to end the year with gains of more than 17%, driven by a 26% jump in technology stocks ( XLK ).
“I don’t see any bubble. However, I believe we’re headed for a bubble,” Century Wealth chief investment strategist Mary Ann Bartel told Yahoo Finance last week.
Batels compared the current market to earlier bubbles, including the late 1920s and the dot-com bubble.
“We’re tracking pretty much the same. In fact, it’s weird how we’re actually tracking that pattern,” she said. “I see a bubble emerging but not bursting from ’29 to ’30.”
But for now, sanctuary strategists predict that tech will lead the market by the end of the decade. They put the S&P 500 between 10,000 and 13,000 by 2030.
“That’s why we’re calling 2026, you know, to be fearless, there’s still significant upside in this market, especially for technology,” she said.
Part of the upside comes from semiconductor stocks. Once treated as commodity plays, they become growth stocks, with Nvidia ( NVDA ) “basically rewriting the path for semiconductor chips.”
The AI chip powerhouse is up more than 40% so far this year, pushing its market capitalization to $4.6 trillion and making it the most valuable publicly traded company. On Friday, Nvidia shares rose after the company announced a $20 billion licensing deal with specialty chipmaker Groq ( GROQ.PVT ).
The deal was announced as the chip space heated up, with Alphabet’s Google ( GOOG ) making headlines with special consumer chips called TPUs.
Alphabet stock is up 65% year to date.
UBS strategists also expect the AI boom and strong profit growth to bolster market gains in 2026.
“We note that forward price-to-earnings multiples are only marginally higher than earlier in the year, reinforcing the fact that earnings growth and a valuation bubble have not driven market gains,” strategists wrote last week.
UBS expects S&P 500 earnings per share to rise about 10% for the year, pushing the index to 7,700 by the end of next year.
Veteran strategist Ed Yardeni also sees the index reaching 7,700 next year, with his “Roaring 2020” scenario 60% likely. He cited “a big, beautiful bill” passed this year and the tax benefits from the AI boom, among other reasons.
In October, Goldman Sachs analysts argued that the stock market is not in a bubble because tech stocks have risen mostly because of real growth, not speculative bets. The firm noted that top-performing companies have strong balance sheets and that the AI sector is still largely led by a few big players, while most bubbles form as more new entrants rush into the hot field.
