The first-quarter earnings season has propelled the stock market to new highs.
The S&P 500 index is up almost 10% this year and has roared back from March lows tied to the United States’ conflict in Iran and the closure of the Strait of Hormuz
Even as cracks appear in consumer sentiment and inflation begins to rise again, it is clear that the market cares about one thing today: artificial intelligence (AI). If usage, revenue, and (importantly) profits associated with the AI build-out keep growing, the market is liable to go higher in 2026. Here’s why.
Everything comes down to AI Even if it isn’t the entire economy, AI has an outsize impact on the S&P 500. Most of the top 25 largest companies in the world by market cap are tied to AI in some way, whether through the supply chain, infrastructure development, or consumer and enterprise services. S&P 500 earnings have kept soaring due to growth in AI spending and the profits it generates.