• S&P 500 has surged 117% since October 2022, adding nearly $40 trillion in market value, driven by AI-related stocks.
  • Equal-weight S&P 500 has underperformed by a record 52 percentage points, highlighting narrow leadership.
  • Nvidia up over 1,900% and Treasury yields recently hitting 5.34%, investors focus on whether earnings growth can sustain the bull market.

A Historic Rally with a Narrow Base

The S&P 500 has climbed approximately 117% since its October 12, 2022 closing low, according to Reuters, adding nearly $40 trillion in market value. The rally, now the eighth-longest post–World War II bull market and the sixth-best-performing, has been powered overwhelmingly by a handful of AI-related giants. The ten largest companies now account for about 40% of the index, up from 28% when the rally began.

That concentration has left the equal-weight S&P 500—where each constituent carries the same influence—in the dust. Bloomberg reported that the equal-weight index was approaching a seventh consecutive weekly decline in early October, even as the conventional index hovered near records. The cumulative gap between the two has reached a record 52 percentage points, a divergence that underscores how much of the market's gains rest on a small cohort of stocks.

"When the market is this concentrated, a reversal in the dominant theme can produce outsized portfolio effects," said Angelo Kourkafas, strategist at Edward Jones. "Investors need to be aware of the risk they're taking."

Nvidia: The Engine and the Vulnerability

At the heart of the rally is Nvidia, now the world's largest company by market value at approximately $5.8 trillion, up from $286 billion in October 2022. The semiconductor giant's shares have risen more than 1,900% over the period. Its fiscal second-quarter 2027 revenue, for the quarter ended July 26, 2026, reached $96.2 billion—up 106% year over year. Data-center revenue alone hit $89.0 billion, or roughly 92% of total sales.

But Nvidia's own customer base is highly concentrated: three direct customers accounted for 16%, 15%, and 13% of revenue during the six months through July. That dependence on a few major buyers raises questions about whether those customers can earn adequate returns on their AI spending. "Tech companies face increasing pressure to prove that today's spending will translate into profits," said Anthony Saglimbene, strategist at Ameriprise.

Macro Crosscurrents Test the Rally

The bull market has hit a near-term snag. After record highs earlier this week, the S&P 500 fell 0.5% and the Nasdaq Composite lost 1.3% on October 8 as AI-related stocks retreated and oil prices rose. The benchmark 10-year Treasury yield climbed to approximately 5.34% during the selloff—a recent high—before easing to around 5.23% in late-afternoon trading.

Higher yields are pressuring rate-sensitive sectors. Through September 29, the S&P 500 gained 2% for the third quarter, while the equal-weight counterpart fell 2% and the Russell 2000 lost 7%, according to Citadel Securities. Meanwhile, Brent crude rose almost 5% to above $105 a barrel on Middle East tensions, adding to inflation concerns.

Monetary policy remains a key constraint. Reuters describes a Federal Reserve pivot toward rate increases to address high inflation. Bloomberg reported that a quarter-point December hike was fully priced into markets on October 8, while Governor Christopher Waller said additional increases would likely be needed.

Earnings Growth: The Last Line of Defense

Supporting the rally is a robust earnings picture. S&P 500 earnings are expected to rise more than 35% in 2026, according to Reuters, fueled by large cloud companies' data-center capital expenditure. Oxford Economics estimates that AI accounts for about one-third of recent U.S. economic growth, including infrastructure investment and stock-market wealth effects.

Yet even strong results may no longer satisfy lofty expectations. Samsung shares fell after reporting an almost ninefold profit increase that still disappointed, while TSMC's reported 51% sales growth did little to lift enthusiasm in the same session.

"Bull markets end because of adverse developments, not simply age," said Mark Hackett, strategist at Nationwide. "But the next phase will hinge on whether AI investments generate durable profits."

The upcoming U.S. midterm elections in November add another layer of uncertainty, which Reuters identifies as a potential source of market volatility. As Edward Jones remains overweight equities but has reduced the aggressiveness of that position, the message is clear: confidence persists, but tolerance for risk is shrinking.

Update: This article has been updated to clarify that the 5.34% Treasury yield refers to the benchmark 10-year note and was a recent high, not the latest yield.