Since late February 2026, the S&P 500 is up ~10%. But strip out AI enablers and the index is essentially flat. The rally is a concentration story, not a broad bull market.The S&P 500 Is Up 10% — But AI Is Doing All the WorkThe S&P 500's impressive rebound since late February looks very different once you strip out the stocks driving it. A Goldman Sachs index that excludes AI enablers is essentially flat over the same period that the headline index has gained approximately 10%. AI winner stocks, meanwhile, have surged more than 45%. Remove AI from the equation, and the rally nearly disappears.This is not a broad bull market story. It is a concentration story — and it may be the most concentrated the US stock market has been around a single theme in modern history.41 stocks, half the marketUsing a JPMorgan list of 41 AI-related stocks, Bianco Research showed those names now account for nearly half of the entire S&P 500's market capitalization. The dominance goes beyond the Magnificent Seven — Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia — that defined the 2023 market narrative. The current AI theme has expanded to include infrastructure providers, power utilities supplying data centers, industrial suppliers, and any company investors view as proximate to the AI spending boom.Jim Bianco of Bianco Research put the historical context bluntly: "We have not seen the market this concentrated around a single theme in 150 years." His comparison is the railroad boom of the late 19th century — the last time a single transformative technology reshaped the economy so completely that it dominated capital markets for a sustained period.Is it a bubble? Probably — but timing is everythingBianco did not shy away from the bubble question. "Is this a bubble? Probably," he wrote. "But the more important question is where investors are in the bubble cycle."The cautionary historical parallel is the dot-com era. Investors who treated Alan Greenspan's December 1996 "irrational exuberance" warning as an exit signal would have missed a nearly 300% Nasdaq rally before the dot-com peak in 2000. Exiting early in a concentration-driven market can be just as costly as staying too long.What it means for investorsThe S&P 500's message is straightforward: as long as AI leadership holds, the index can continue to look strong at the headline level. But the Goldman Sachs ex-AI index sitting essentially flat is a warning about what lies beneath. If AI enablers fade — whether from earnings disappointments, valuation compression, or a macro shift — the index may have significantly less support underneath than its current level suggests.For crypto markets, the AI concentration story carries its own implications. The same institutional capital flowing into AI stocks is competing with Bitcoin and digital assets for risk allocation. As long as AI delivers outsized returns, the relative case for crypto ETF inflows weakens. A rotation out of AI — however unlikely in the near term — could be one of the most powerful catalysts for a crypto recovery.
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