Nvidia and Super Micro Computer led the movement, soaring in the triple digits.
The S&P 500 entered a bull market earlier this year when it reached a record high, but it hasn’t stopped there. The benchmark continued to hit new highs in the months that followed and now has finished the first half with a double-digit gain. Though stocks across industries have benefited from renewed optimism in the market, one industry in particular has led the movement.
I’m talking about technology stocks that are heavily focused on artificial intelligence (AI). In the first five months of the year, the four biggest contributors to the S&P 500’s gains were major players in AI. Why are investors so eager to get in on the story? Because this technology has the potential to transform companies’ operations, making them more efficient so that earnings may eventually soar. These players can benefit from AI over time — and companies selling tools to make AI happen are already seeing revenue growth today.
So, AI stocks fueled market gains in the first half. But considering the long-term opportunity here, is the best yet to come? Let’s find out.
Image source: Getty Images.
Nvidia contributes the most to S&P 500 gains
First, a look at the performance we’ve seen so far this year. Data through May 31 shows AI chip giant Nvidia (NVDA -0.36%) contributed the most, more than 32%, to the S&P 500’s returns, according to Statista data. Amazon, Meta Platforms, and Microsoft — all heavily investing in the area of AI — followed with contributions between 5% and nearly 7%.
And if we look at top performers in the S&P 500 for the first half, they, too, are AI stocks. Super Micro Computer, a maker of servers and full rack scale solutions for AI data centers, surged nearly 200% for the top performance, and Nvidia climbed about 150% for the second-biggest gain. And this is after advancing more than 3,000% over the past five years, boosted by optimism about AI revenue.
Now, before saying share performance has reached a peak for these players, it’s important to remember that we’re in the early days of the AI growth story. Analysts expect today’s $200 billion AI market to reach beyond $1 trillion by the end of the decade. Companies today are early in the build outs of their AI projects, Nvidia CEO Jensen Huang said during his company’s recent earnings call.
And new AI markets are just getting started too — for example, sovereign AI, or the development of AI platforms by countries. Huang says this area, which represented zero revenue last year, is set to bring in billions for Nvidia this year.
Meta’s rewards down the road
Companies’ investments today also will take time to bring AI products to market and generate revenue, meaning there’s more to come on this level too. Meta CEO Mark Zuckerberg said in the company’s latest earnings call that building leading AI products and services “is likely going to take several years.” That implies the company will reap rewards not immediately but down the road.
It’s clear that companies selling tools to build AI platforms — such as Nvidia and Super Micro Computer — already are seeing AI growth, and this is set to continue today and well into the future. Thanks to this, Amazon Web Services, which sells a variety of AI products and services, recently reached a $100 billion annual revenue run rate.
Other companies, like Meta, aren’t monetizing their AI investments yet, but investors are optimistic about the AI focus spurring growth in the future. In both of these situations, the AI story has much farther to go, and this means the revenue and share performance opportunities are far from over.
Will AI stocks lead second-half gains?
In fact, the best likely is yet to come. Does this mean AI stocks will lead S&P 500 gains in the second half of the year? It’s impossible to predict stock performance, especially in the short term, but if AI companies continue to report high growth, strong demand for their products, and advancements in their AI product development, these players could once again drive stock market gains.
And if they don’t, no need to worry. Since the AI story is in its early days, there’s plenty of time for these companies to deliver growth from their AI investments over time — and that could push their share prices significantly higher in the years to come. Meanwhile, any dips in share price may offer investors solid buying opportunities.
So, this means there’s reason to be optimistic about AI stocks in the second half of the year and over time.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
