The European Central Bank has published an analysis finding that strong realized and expected earnings associated with artificial intelligence investment have been the main force supporting US equity prices. High earnings expectations and strong risk appetite have compressed equity risk premia and helped insulate markets from higher long-term interest rates, adverse macroeconomic developments and geopolitical shocks since the AI boom began in autumn 2022. Risk pricing has become subdued across several sectors, particularly technology, with the equity risk premium near zero at the 25th percentile of S&P 500 companies. However, widening differences in risk premia among technology stocks indicate that some higher-risk firms are becoming more vulnerable as sentiment toward the AI rally weakens. Market concentration could amplify any correction, with concentration in the S&P 500 above its historical 95th percentile and in the information technology sector above its 75th percentile, increasing the potential for underperformance by a few large AI related companies to affect the broader market.
2026-09-22European Central Bank
European Central Bank assesses AI boom support for US equities and rising concentration risks
The European Central Bank finds that strong earnings expectations and compressed risk premia have supported US equities and limited their sensitivity to adverse shocks during the AI boom. Widening risk differentiation among technology companies and historically high market concentration increase the risk that weakness in a few large AI related stocks could trigger broader declines.