Scared of an AI stock bubble? Then don't look at this chart.

Bank of America strategists warned that AI stock concentration has reached levels seen before previous market bubbles, with the 'AI Big 10' now comprising 41% of the S&P 500, similar to tech and telecom during the dot-com bubble. The Nasdaq Composite surged 21.4% in Q2 2026, driven by AI infrastructure investment, but analysts caution that the bullish trade may be tested in the current quarter due to known drivers and potential hawkish Fed policy.

And today in AI stock bubble-watching news… Quick insight: AI stock concentration has reached the same level that resulted in the bursting of previous bubbles, Bank of America strategists pointed out. The "AI Big 10" now make up 41% of the S&P 500 ^GSPC https://finance.yahoo.com/quote/^GSPC/ , similar to the share of tech and telecom during the dot-com bubble. The 10 companies making up BofA's AI Big 10 are Nvidia NVDA https://finance.yahoo.com/quote/NVDA/ , Microsoft MSFT https://finance.yahoo.com/quote/MSFT/ , Alphabet GOOG https://finance.yahoo.com/quote/GOOG/ , GOOGL https://finance.yahoo.com/quote/GOOGL/ , Amazon AMZN https://finance.yahoo.com/quote/AMZN/ , Meta META https://finance.yahoo.com/quote/META/ , Apple AAPL https://finance.yahoo.com/quote/AAPL/ , Tesla TSLA https://finance.yahoo.com/quote/TSLA/ , Broadcom AVGO https://finance.yahoo.com/quote/AVGO/ , Micron MU https://finance.yahoo.com/quote/MU/ , and Advanced Micro Devices AMD https://finance.yahoo.com/quote/AMD/ . The why: The Nasdaq Composite ^IXIC https://finance.yahoo.com/quote/^IXIC/ delivered a blockbuster performance in the second quarter of 2026, surging 21.4% to post its best quarterly run since the post-pandemic rebound of 2020. The explosive growth was primarily fueled by an unrelenting investment boom surrounding artificial intelligence infrastructure. That propelled semiconductor hardware heavyweights such as AMD and memory suppliers like Micron to record highs. Momentum in tech was further amplified by the mid-June IPO of Elon Musk's SpaceX SPCX https://finance.yahoo.com/quote/SPCX/ . The tech-heavy index did experience a minor 2.8% pullback in June as investors briefly rotated capital into small caps and worried about Big Tech's AI capital expenditures. Bottom line: If the bullish AI trade is going to be tested, it will come in the current quarter. For one, the drivers of the 2026 AI trade are now well known, lessening the likelihood of positive surprises when earnings season begins shortly. And more hawkish talk on interest rates from new Fed Chairman Kevin Warsh is likely. That would be unwelcome for high-multiple stocks in the AI sector. "I think the gains can continue. But I think that the narrative is going to change a little bit," Portfolio Wealth Advisors chief investment officer Lee Munson said on Yahoo Finance's Opening Bid https://finance.yahoo.com/video/were-the-mag-7-more-like-the-lag-7-in-q2-2026-140012890.html . "This is less about the earnings bubble in Micron … But I think investors are starting to talk about why we have the Magnificent Seven stocks becoming the Lag Seven — what are people getting for buying all those pickaxes and shovels." Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi , Instagram , and LinkedIn . Tips on stories? Email brian.sozzi@yahoofinance.com. Click here for the latest technology news that will impact the stock market Read the latest financial and business news from Yahoo Finance