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The market’s relentless rally has pushed the S&P 500 up nearly 25% from its October lows, fueled by gains in only a handful of stocks.

Leading the charge is AI favorite Nvidia (NVDA). The chipmaker has gained more than 80% since the start of the year, helping drive the S&P 500 (^GSPC) and Nasdaq (^IXIC) to record levels.

The concentrated outperformance has prompted some on Wall Street to warn the rally has gone too far and declare stocks are in bubble territory.

Market concentration has surged to a multi-decade high. The 10 largest US stocks now account for 33% of S&P 500 market cap and 25% of S&P 500 earnings, according to Goldman Sachs data.

But concerns over narrow market participation and frothiness may be misguided. Several top Wall Street strategists made it clear on Yahoo Finance’s “Morning Brief” last week that there’s reason to believe the market will keep going up.

“This might be the best sell side trick out there right now… I don’t think that’s justified,” Citi US Equity Strategy Director Drew Petit said of the bubble fear on Yahoo Finance Live. “It’s actually a lot healthier than people are giving it credit for.”

Strong quarterly results from big tech have bolstered the bull case. Nvidia posted another blow out quarter thanks to surging AI demand, while Meta (META), Microsoft (MSFT), and Amazon (AMZN) topped expectations.

Higher profit margins and proven returns are two reasons Wedbush analyst Dan Ives describes the current market environment as a “1995 moment” rather than comparing it to the start of the dotcom bubble.

“This is nowhere near the 1999/2000 period in our view as the sky high valuations, lack of monetization/ infrastructure, weak balance sheets, froth business models, and macro backdrop was in a totally different world back then compared to what we see today,” Ives wrote in a note to clients.

Citi’s head of US semiconductor research Chris Danely echoed Ives’s bullish view on tech, telling Yahoo Finance he “doesn’t see any end in sight.”

“We’ve got a long way to go until we’re going to start ringing the alarm bells or even hear a tinkling of bells,” Danely told Yahoo Finance Live.

Beyond tech and beneath the surface, underlying trends are positive. Market breadth — an indication of bullish sentiment — has slowly started to improve. The S&P 500 equal weight index (SPXEW) and small caps outperformed the S&P 500 over the past month.

“The broadening out we’re seeing is happening in a stealthy way,” Charles Schwab’s Liz Ann Sonders told Yahoo Finance, adding that churn under the surface is “not a bad thing.”

And, it’s important to note, history says elevated concentration isn’t necessarily indicative of a market top. Goldman Sachs analyzed market concentrations spanning the past 100 years, and found the S&P 500 rallied more often than not following past concentration peaks.

“One consistent pattern around periods of elevated concentration is large swings in Momentum,” Goldman Sachs equity analyst Ben Snider wrote in a note to clients. “While the performance of the high Momentum leaders was inconsistent, the previous laggards appreciated in absolute terms in every episode. This supports our view that a “catch up” by laggards is more likely to interrupt the ongoing Momentum rally than a ‘catch down’ by the recent market leaders.”

Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email

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