Why Wall Street thinks the stock market can keep climbing even as AI anxiety grows

With stocks near all-time highs, strategists are dismissing concerns about an artificial intelligence bubble.

At least that’s the case for now.

The S&P 500 (^GSPC) is on track to end the year with a gain of more than 17%, driven by a 26% gain in technology stocks (XLK).

“I don’t see a bubble at all. However, I do believe we’re going to be in a bubble,” Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, told Yahoo Finance last week.

Batels compared the current market to previous bubbles, including the late 1990s and the dot-com bubble.

“Our tracking is very similar. In fact, the way we track this pattern is a little weird,” she said. “I see a bubble emerging, but it may not go away until 29 to 30 years.”

But for now, Shelter strategists predict technology will continue to lead the market higher through the end of the decade. They expect the S&P 500 to be between 10,000 and 13,000 by 2030.

“That’s why we’re calling it 2026, you know, to be fearless, there’s still huge upside in this market, especially on the technology side,” she said.

Some of the upside comes from semiconductor stocks. Once considered a commodity, they become a growth stock, with Nvidia (NVDA) “basically rewriting the path of semiconductor chips.”

Since the beginning of this year, the artificial intelligence chip giant’s share price has surged more than 40%, with a market value of US$4.6 trillion, making it the most valuable listed company. Nvidia shares rose on Friday after the company announced a $20 billion licensing deal with specialist chipmaker Groq (GROQ.PVT).

The deal was announced as the chip sector heats up, with Alphabet’s Google (GOOG) making headlines for its specialized customer chips called TPUs.

Alphabet shares have soared about 65% so far this year.

UBS strategists also expect the artificial intelligence boom and strong profit growth to support market gains in 2026.

“We note that forward P/E ratios are only slightly higher than at the beginning of the year, reinforcing the fact that earnings growth, not valuation bubbles, is driving the market higher,” the strategists wrote last week.

UBS expects S&P 500 earnings per share to rise about 10% year-on-year, with the index rising to 7,700 points by the end of next year.

Senior strategist Ed Yardeni also expects the index to hit 7,700 next year, giving his “roaring 2020s” scenario a 60% chance. He cited tax benefits from “a big, beautiful bill” passed this year and a boom in artificial intelligence as reasons.

In October, Goldman Sachs analysts argued that the stock market was not in a bubble because the gains in tech stocks were largely due to real growth rather than speculative bets. The company noted that the best-performing companies have strong balance sheets, that the AI ​​industry is still largely dominated by a few giants, and that most bubbles occur when many new entrants flood into popular industries.