Last month's White House AI Summit put the boom on display. US President Donald Trump gathered tech billionaires including Amazon's Jeff Bezos, Meta's Mark Zuckerberg and Elon Musk, chipmakers Jensen Huang of Nvidia, Lisa Su of AMD and Sanjay Mehrotra of Micron, and leaders of AI labs OpenAI and Anthropic, among them Dario Amodei, Greg Brockman and Tom Brown. The analysis, which uses Australian dollars throughout, puts the group's combined estimated net worth at more than $2.5 trillion.
Tech stocks now make up about 44 per cent of the S&P 500's total value, and six of the eight biggest US companies are in tech, using a definition that excludes Amazon and Tesla. Nvidia is the world's most valuable company at about $7.5 trillion (about $US5.2 trillion). Over the past six months Apple has grown the most, rising 30 per cent to add more than $1.4 trillion, while Micron and AMD more than doubled their valuations. Around 230 of the index's 500 stocks have fallen since April, losing $2.9 trillion combined, but those losses were more than offset by gains at just Meta, Microsoft and Apple. The six biggest winners, which also include Micron, Nvidia and AMD, grew by more than $5 trillion and account for 57 per cent of the index's gains. Without them, the S&P 500 would have risen 4.35 per cent over six months rather than 10 per cent.
RMIT economics professor Angel Zhong said the level of concentration was unusual. At the peak of the dot-com bubble in 2000, the top 10 stocks made up about 27 per cent of the S&P 500, she said, against about 39 per cent today. Unlike in that era, when valuations rested largely on hype, chipmakers Nvidia, Micron and AMD are already highly profitable. But Professor Zhong cautioned that "revenue at the leading AI labs is still a fraction of what is being spent on their behalf". The labs, along with platforms such as Microsoft, Meta and Alphabet, are the main buyers of chips and data centre capacity, and their spending is outpacing even their strong profits. "This boom started out being paid for mostly from profits," she said. "Now it increasingly relies on outside money, including a lot of debt."
Professor Zhong also pointed to what she described as circular financing. Nvidia has been called the "bank of AI" for investing hundreds of billions of dollars in its biggest customers. In one example, Nvidia announced it would invest up to $144 billion in OpenAI's infrastructure; OpenAI then signed a $430 billion contract to use Oracle data centres, and Oracle spent $58 billion on Nvidia chips. "[These] companies are each other's investors, suppliers and customers at the same time," she said. "It's harder to tell how much AI demand is genuine and how much is funded by the sellers themselves. If one key player, especially OpenAI, ran into trouble, the effects would ripple through the whole network."
Steve Johnson, chief investment officer of investment fund Forager, said AI companies were among the fastest-growing businesses the world has ever seen. "We've never seen anything like it," he said, while noting the risks of a concentrated AI-heavy market. He agreed the technology had the potential to change the world. "There's no doubt about AI's impact on the broader economy," he said.
Nvidia's Huang told Bloomberg that wobbles in AI stocks over the past week would pass because the technology is "going to impact in a very positive way every single industry and every single country". The concentration could deepen if OpenAI and Anthropic, both private companies, proceed with plans to go public and list on the stock market.