AI Rally Is Tracking the Dot-Com Era as Market Concentration Reaches Extremes

The current AI-driven equity rally is drawing increasingly close comparisons with the late-1990s dot-com boom.
Since ChatGPT launched, the cap-weighted S&P 500 has outperformed the equal-weight version by nearly 50 percentage points.
That divergence looks strikingly similar to the period between Yahoo’s 1996 IPO and the 2000 market peak.
In both cases, a relatively small group of dominant technology companies carried a disproportionate share of index returns.
That does not mean today’s market must follow the same path as the dot-com bubble.
But extreme concentration does make the broader index increasingly dependent on earnings growth, valuations and sentiment across only a handful of companies.
If those leaders continue delivering, concentration can persist much longer than expected.
If growth disappoints or valuations compress, the same concentration that powered the rally can amplify downside across the index.
The key question is not whether concentration eventually normalizes, but how long current AI leaders can keep growing fast enough to justify their expanding share of the market.