Invesco’s Chief Global Market Strategist, Brian Levitt, notes that bearish market narratives are facing increasing headwinds as artificial intelligence demand strengthens, corporate earnings improve, market participation broadens, and inflation worries gradually ease. Should AI agents gain widespread adoption in the future, the current wave of AI infrastructure investment may not represent an earnings bubble, but rather a foundation for sustained computational demand growth over the coming years.
There was once a prevailing view that AI was merely a technological project without a mature business model. However, the conversation has shifted dramatically in recent times. With the surge in AI demand, the primary challenge in many cases is no longer finding customers, but securing sufficient chips, electricity, storage, data center capacity, and power infrastructure to meet market needs.
Many investors previously considered equity valuations to be excessively high. Nevertheless, corporate earnings and earnings expectations have grown so rapidly that even with the market's continued ascent, valuation levels remain more reasonable than anticipated. The market is currently in its fourth consecutive year of robust gains.
In the past, the equity market rally was driven primarily by a handful of mega-cap technology stocks, leading many investors to worry this trend was unsustainable. However, since the start of this year, equal-weight indices have outperformed their market-cap-weighted counterparts. Market participation has expanded significantly, with nearly two-thirds of stocks trading above their 200-day moving averages. This is not an indication of narrowing market breadth, but rather a reflection of a healthier and broader market.
Some have suggested that AI-related spending resembles a self-reinforcing demand loop, fueled by companies' own products and financing arrangements. However, NVIDIA's recent announcement of partnerships with several major financial institutions largely counters this argument. A growing number of external capital providers are participating in AI infrastructure investment financing, rather than relying on NVIDIA for funding. This moves the entire ecosystem closer to a traditional capital expenditure cycle supported by independent financing, while alleviating concerns that capital is merely circulating among the same group of companies.
Despite periods of market volatility, oil prices have largely remained near their levels from mid-April this year. Meanwhile, inflation expectations reflected in the bond market have declined notably. Recent U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data have also delivered more positive signals, indicating that inflationary pressures are moderating.
There is a perspective that hyperscale cloud service providers' AI infrastructure investments are overly aggressive, effectively pulling forward future demand. According to this logic, current spending merely reflects earnings for semiconductors, storage, networking equipment, power, and industrial companies several years ahead of schedule. However, this viewpoint may overlook the broader macro-level outlook.
It is currently estimated that roughly 250,000 people worldwide are actively training AI agents to work for them around the clock. While this number appears substantial, it is minuscule compared to the global population of approximately 8 billion. If, in the future, not hundreds of thousands but hundreds of millions of people deploy AI agents to work continuously on their behalf, today's investment surge may not be viewed as overinvestment in hindsight, but rather as an early start. It is even possible that in the coming years, computing capacity will remain in a state of sustained tight supply, with demand growth potentially continuing to outpace supply even as the entire ecosystem invests at scale.
The bull market continues to challenge bearish perspectives. The S&P 500's strong gains and expanding market participation both provide support for the market's upward trajectory. The S&P 500 rose 26.26% in 2023, 25% in 2024, and 17.86% in 2025, and has already climbed 13.95% so far in 2026.