The S&P 500 index has increased by 10% year-to-date, reaching a record high largely due to the investments from the Magnificent 7 tech companies in AI infrastructure. This surge in capital expenditure is not only supporting the index's performance but also contributing an estimated 0.5% to GDP growth in the first half of the year. The concentration of growth in the top stocks is at the highest level since the 1960s, alongside a notable percentage of companies exceeding earnings expectations. Overall, AI-related spending is projected to continue boosting economic expansion in the coming years.
The S&P 500 is up 10% year-to-date, powered by the 'Magnificent Seven' tech giants whose foreign-heavy revenues are being boosted by the weaker dollar. Concentration in the top 10 stocks is at its highest since the 1960s, with earnings strength - 83% of companies beating estimates - driving sentiment.
AI spending has added half a percentage point to GDP growth in the first half of this year, suggesting a significant contribution to economic activity and future growth.
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