Nvidia and Super Micro Computer led the way, up triple-digit shares.
He S&P 500 It entered a bull market earlier this year when it hit an all-time high, but it didn't stop there. The benchmark index continued to hit new highs in the following months and has now finished the first half with a double-digit gain. While stocks across all sectors have benefited from renewed optimism in the market, one sector in particular has led the charge.
Iโm talking about tech stocks that focus heavily on artificial intelligence (AI). In the first five months of the year, the four biggest contributors to S&P 500 earnings were major AI players. Why are investors so eager to get in on the story? Because this technology has the potential to transform companiesโ operations, making them more efficient so that profits can ultimately soar. These players stand to benefit from AI over time, and companies selling tools to make AI a reality are already seeing revenue growth today.
So, AI stocks drove market gains in the first half. But considering the long-term opportunity, is the best yet to come? Let's find out.
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Nvidia is the biggest contributor to S&P 500 earnings
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%) It contributed the most, more than 32%, to the S&P 500's returns, according to Statista data. Amazon, Target platformsand Microsoft -- all heavily Investing in the AI โโarea -- followed with contributions between 5% and almost 7%.
And if you look at the best-performing stocks in the S&P 500 during the first half, they are also AI stocks.. Super microcomputera maker of servers and full-scale solutions for artificial intelligence data centers, rose nearly 200% for the top performer, and Nvidia climbed about 150% for the second-biggest gain. And thatโs after advancing more than 3,000% over the past five years, driven by optimism about AI revenues.
Now, before we say that stock performance has peaked for these players, it's important to remember that we're in the early days of the AI โโgrowth story. Analysts expect the current $200 billion AI market to surpass $1 trillion by the end of the decade. Current companies are in the early stages of developing their AI pipelines, Nvidia CEO Jensen Huang said during his company's recent earnings call.
And new AI markets are also starting to emerge: for example, sovereign AI, or the development of AI platforms by countries. Huang says this area, which accounted for zero revenue last year, will generate billions for Nvidia this year.
Meta rewards in the future
Current investments by companies will also take time to bring AI products to market and generate revenue, meaning there will be more to come at this level as well. CEO of Meta Mark Zuckerberg In the company's latest earnings presentation, it said developing leading AI products and services "will likely take several years." This implies that the company will reap the rewards not immediately, but in the future.
It's clear that companies that sell tools to build AI platforms, such as Nvidia and Super Micro Computer, are already seeing AI growth, and this will continue today and in the future. Thanks to this, Amazon Web Services, which sells a variety of AI products and services, recently reached annual revenue of $100 billion. running rate.
Other companies, like Meta, are not yet monetizing their AI investments, but investors are optimistic that the focus on AI will spur growth in the future. In both situations, the AI โโstory has much further to go, and this means that the revenue and performance-sharing opportunities are far from over.
Will AI Stocks Lead Second Half Earnings?
In fact, the best 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 progress in the development of their AI products, these players could drive momentum again. stock market gains.
And if not, there's no need to worry. Since the AI โโstory is in its early days, there's plenty of time for these companies to generate growth from their AI investments over time, and that could see their stock prices rise significantly in the coming years. In the meantime, any dips in the stock price can offer investors solid buying opportunities.
So, this means there is reason to be bullish on AI stocks in the second half of the year and over time.
Randi Zuckerberg, a former market development director and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, a former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino The Motley Fool 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: January 2026 $395 call options on Microsoft and January 2026 $405 call options on Microsoft. The Motley Fool has a disclosure policy.
