A Goldman Sachs index designed to track market performance while excluding artificial intelligence enablers tells a starkly different story than the headline number. Since late February, that adjusted measure has moved slightly lower. The broader S&P 500, by contrast, is up roughly ten percent over the same period. AI-related winners have surged by more than 45 percent. The gap between those three figures is not a footnote. It is the story.
The S&P 500 and the AI concentration driving its gains
What is happening in the market right now is less a broad rally than a highly concentrated one. A relatively small cluster of companies tied to artificial intelligence infrastructure, software, power-intensive utilities, and industrial suppliers are responsible for a disproportionate share of the index’s upward movement. Remove them, and much of the apparent strength disappears.
This dynamic has roots in a pattern that began taking shape in 2023, when a group of megacap technology companies started pulling the index higher while most of the broader market lagged significantly behind. That earlier phase was defined by a handful of dominant names spanning consumer technology, cloud computing, social media, electric vehicles, and semiconductors. The current phase is different in character. It is no longer primarily about individual company size. It is about thematic concentration around a single technological wave.
AI infrastructure plays, companies building the chips, data centers, power systems, and software layers that make large-scale artificial intelligence possible, now account for a striking share of the index’s total market value. One research firm, using a list of roughly 40 AI-related stocks, estimated those names represent nearly half of the S&P 500’s entire market capitalization. That level of concentration around a single investment theme is historically unusual by almost any measure.
What history says about markets this concentrated around one theme
Research from Bianco Research has argued that the degree of thematic concentration currently visible in the market has not been seen in approximately 150 years. The historical comparison being drawn is the railroad boom of the late 19th century, a period when a single transformative technology dominated capital allocation because it was fundamentally reshaping the economic landscape in ways that investors recognized as generational. The argument is that artificial intelligence carries comparable transformative potential, and that markets are pricing it accordingly.
That framing raises an obvious and uncomfortable question. Markets in the grip of a genuine transformational technology can also produce speculative excess that eventually corrects, sometimes violently. The dot-com era offers the most recent cautionary version of that story. Investors who interpreted early warnings about irrational market valuations in the mid-1990s as a signal to exit would have missed a Nasdaq rally of nearly 300 percent before the eventual collapse. The difficult truth is that identifying a bubble and knowing when it peaks are two entirely separate problems.
What the S&P 500 concentration means for investors now
The practical implication of all this is relatively straightforward. The S&P 500’s apparent resilience is heavily dependent on the continued performance of a narrow group of AI-related names. As long as those stocks hold their leadership position, the index can maintain the appearance of broad strength. If that leadership falters, whether due to valuation concerns, earnings disappointments, regulatory pressure, or simply a rotation in investor sentiment, the index may have considerably less structural support than the headline level implies.
That does not make the current rally wrong or unsustainable by definition. Concentrated markets built around genuinely transformative technologies can sustain themselves longer than skeptics expect and generate significant returns for investors willing to remain positioned. What it does mean is that the S&P 500’s current level reflects a specific and fairly fragile set of conditions rather than broad economic health distributed across the market. The difference matters, especially for anyone reading the headline number as a signal of something more durable.
