As stocks approach all-time highs, strategists are downplaying concerns about an AI bubble.
At least for now.
The S&P 500 (^GSPC) is on track to close the year with a gain of more than 17%, boosted by a 26% jump in technology stocks (XLK).
“I don’t see any bubble at all. However, I do think we’re going to enter a bubble,” Sanctuary Wealth chief investment strategist Mary Ann Bartels told Yahoo Finance last week.
Batels compared the current market to previous bubbles, including those of the late 1920s and the dot-com bubble.
“We’re tracking pretty similarly. In fact, it’s a little disturbing how we’re tracking that pattern,” he said. “I see a bubble happening, but it won’t come out until maybe the 29th or 30th.”
But for now, Sanctuary strategists predict that the technology will continue to lead the market until the end of the decade. They place the S&P 500 between 10,000 and 13,000 by 2030.
“That’s why we called 2026, you know, to not be afraid, because there are still significant upsides in this market, particularly for technology,” he said.
Part of the upside comes from semiconductor stocks. Once treated as commodities, they become growth stocks, and Nvidia (NVDA) “basically rewrites the path of semiconductor chips.”
The power of AI chips has increased more than 40% so far this year, raising 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 was heating up, with Alphabet’s (GOOG) Google making headlines with its specialized customer chips called TPUs.
Alphabet shares have soared about 65% so far this year.
UBS strategists also expect the rise of AI and strong earnings growth to underpin market gains in 2026.
“We note that forward price-earnings multiples are only marginally higher than at the beginning of the year, reinforcing the fact that earnings growth and not valuation bubbles have driven market gains,” the strategists wrote last week.
UBS forecasts that S&P 500 earnings per share will grow about 10% year over year, taking the index to 7,700 by the end of next year.
Veteran strategist Ed Yardeni also sees the index hitting 7,700 next year, with a 60% chance of his “Roaring 20s” scenario. He cited, among other reasons, the tax benefits of the “One Big Beautiful Bill” that was passed this year and the rise of AI.
In October, Goldman Sachs analysts argued that the stock market is not in a bubble because tech stocks have risen primarily due to real growth, not speculative bets. The firm noted that the best performing companies have strong balance sheets and that the AI ​​sector is still mainly led by a few large players, while most bubbles occur when many new entrants rush into a trendy sector.
