One big worry from investors in 2026 is whether the S&P 500 (SNPINDEX: ^GSPC) is too top-heavy with artificial intelligence (AI) stocks. Major tech names involved with the AI trade are investing hundreds of billions of dollars in capital expenditures to buy chips and build data centers.
All this AI-related spending has spilled over into the rest of the economy. Massive investment in AI has brought stronger corporate earnings to a variety of sectors in the S&P 500. A recent Bloomberg analysis found that 86% of S&P 500 companies exceeded analyst earnings expectations so far in 2026.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
On the one hand, seeing so many S&P 500 companies beat earnings expectations is great news for the economy and the stock market. This could be a sign that large-cap stocks aren’t overvalued. There might be more room for this bull market to keep running.
But what if S&P 500 earnings growth depends too much on AI spending? If you believe that the AI boom might be a bubble that bursts, you might want to diversify away from AI stocks. In that case, you might want to buy totally different parts of the market, like small-cap stocks or value stocks.
Let’s look at how investors can position themselves for these two possible futures.
Future 1: Continued strong, broad growth in the S&P 500
The simplest play for investors is almost always to buy a low-cost index fund, such as the Vanguard S&P 500 ETF (NYSEMKT: VOO). Whether or not you’re worried about an AI bubble, this S&P 500 ETF is often a good choice. It’s delivered annualized returns of about 15% for the past 16 years.
Just “VOO and chill” is usually a good plan for long-term investors. If the AI boom really does lead to a bright future of massive productivity gains and widespread economic growth, the Vanguard S&P 500 ETF will likely keep delivering strong returns.
But even if the AI boom doesn’t pay off as well as expected, VOO might still be a good investment. Over time, the S&P 500 keeps adjusting and sorting itself, promoting winners and demoting losers. Investing in VOO lets you own the 500 largest publicly traded companies in America, and no matter what happens next with the AI trade or the economy, America’s largest corporations tend to be very good at making money in the long run.
