AI stocks now make up about 40% of the U.S. stock market, according to Bravos Research, a level similar to concentrations seen before the 2000 Dot-Com crash and the 1929 market downturn.
The firm said the U.S. technology index has nearly doubled over the past 12 months. Over the last 26 years, similar gains occurred only during the Dot-Com boom in 2000 and the technology rally of 2021.
Bravos said the current concentration in AI-related stocks resembles previous periods when investors heavily favored emerging technologies. Internet companies led markets in 2000, while electricity, radio and automobile-related firms attracted investment before the 1929 crash. Earlier, railroad companies saw similar investor enthusiasm during the 19th century.
The firm noted that many of those technologies later became widely adopted and had a lasting economic impact.
AI adoption continues to expand. Companies including OpenAI and Anthropic have reported strong revenue growth, while demand for AI-related talent has increased. The share of U.S. companies hiring for AI-related roles has risen from 2% to 5.7% over the past eight years.
Investor views have also shifted. Hedge fund manager Ken Griffin, who was previously skeptical about AI, has become more positive on its potential impact on productivity.
Bravos said technology adoption alone does not determine market performance. Previous technology booms continued to drive economic change after market declines, but tighter financial conditions reduced investor appetite for risk.
The firm said liquidity remains supportive for technology stocks. The Federal Reserve has maintained a relatively accommodative policy stance since 2023, and markets are not currently expecting interest rate increases.
According to Bravos, the main conditions typically associated with market bubbles, strong investor interest, ample liquidity and positive price momentum, remain in place. While risks remain, the firm said those factors could continue to support AI-related stocks.
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