AI-Driven Market Surge Meets Investor Skepticism in 2026

In H1 2026 the S&P 500 rose 9.6 %, the Nasdaq 12.8 % and the Dow 8.9 %—the Dow’s best half-year since 2021. The Russell 2000 added 22 % while the PHLX Semiconductor Index fell about 6 % after an 80 % chip rally. Cybersecurity firms Palo Alto Networks and CrowdStrike posted quarterly gains of roughly 95 % and 113 %. Meta Platforms announced it will monetize surplus AI compute, estimating $125-$145 bn of hardware may exceed 2026 demand; CoreWeave and Nebius, its data-center customers, fell 13.9 % and 17 %.

AI-driven rotation reshapes stock market leadership

Meta, Nvidia, Samsung, SK Hynix, CoreWeave, Nebius and investor Michael Burry are key players. Analysts forecast a 25 % profit rise for S&P 500 firms by 2027, with earnings estimates up 20 % in six months. H100 GPU rentals have risen 40 % from $1.70 to $2.35 per hour since Oct 2025, while DDR5 memory contracts are nearly five-fold YoY higher. Burry estimates a $176 bn depreciation understatement through 2028, implying Meta’s 2028 earnings could be overstated by 20.8 %.

Meta’s AI plans just sent the stock market a $145bn message — and investors should read it twice

Michael Burry argues hyperscalers are inflating earnings by extending chip depreciation, creating a $176 bn understatement and potentially overstating Meta’s 2028 earnings by 20.8 %. He has shorted AI-linked equities such as Tesla, Applied Materials, Caterpillar, the SOXX ETF, Nvidia and Palantir. Meta said the capacity sale is a strategic pivot; Nvidia denied structural problems; Palantir’s CEO called Burry “completely crazy.” After Samsung and SK Hynix announced a $520 bn semiconductor hub, the Nasdaq rose about 4 % in two days, while CoreWeave and Nebius shares fell.

Following the AI boom, the stock market is already preparing for a "profit bubble" for listed companies.

Ben Inker of GMO warned that profit growth forecasts are at an “extremely high rate, something we’ve never seen outside of a post-crisis recovery,” and cautioned that “what the market expects is the eventual realization that these forecasts will not materialize.” Capital Economics echoed the concern, noting AI-related markets may soon reach unsustainable earnings and cap-ex expectations. This contrasts with Burry’s $176 bn depreciation understatement, while H100 rental rates have risen 40 % since Oct 2025, indicating older chips retain value. Uncertainty remains over whether AI-driven spending can sustain profitability.

Following the AI boom, the stock market is already preparing for a "profit bubble" for listed companies.

• “Profit growth forecasts for listed companies over the next two years are growing at an extremely high rate, something we’ve never seen outside of a post-crisis recovery,” — Ben Inker, co-head of asset allocation, GMO

Following the AI boom, the stock market is already preparing for a "profit bubble" for listed companies.

• “What the market expects is the eventual realization that these forecasts will not materialize,” — Ben Inker, co-head of asset allocation, GMO

Following the AI boom, the stock market is already preparing for a "profit bubble" for listed companies.

• “AI-related stock markets may be approaching a point where earnings expectations and capital expenditure projections become difficult to sustain” — Capital Economics analyst

Following the AI boom, the stock market is already preparing for a "profit bubble" for listed companies.

• “The immediate cause of this increase is the large expenditures announced by Korea,” — Michael Burry, investor

Following the AI boom, the stock market is already preparing for a "profit bubble" for listed companies.

The upcoming Q2 earnings season will test whether AI-driven profit expectations hold. Analysts will monitor compute demand, chip rental trends, and data-center utilization. A slowdown could force earnings revisions, heightening the risk of a market pullback.

Following the AI boom, the stock market is already preparing for a "profit bubble" for listed companies.