The AI trade just shattered another milestone as Nvidia became the first company to hit a $5 trillion valuation, while tech giants announced massive capital expenditure increases that suggest this isn't your typical market bubble. Instead of the sugar rush crash that skeptics predicted, AI investments are creating what CEO Jensen Huang calls a 'virtuous cycle' - where usage drives investment, which improves technology, which drives more usage.
The bears betting against tech got burned last month. The S&P 500 climbed 2.3% in October, defying the dreaded 'Octoberphobia' that historically haunts markets due to the crashes of 1929 and 1987. But the real story was in the Nasdaq Composite, which surged 4.7% as artificial intelligence transformed from Wall Street darling into market juggernaut.
Friday's trading session perfectly captured this momentum. Amazon shares rocketed 9.6% after CEO Andy Jassy pointed to 'strong demand in AI and core infrastructure' during the company's earnings call. The surge wasn't isolated - it lifted AI-adjacent stocks like Palantir and Oracle, creating a rising tide that elevated the entire sector.
But Nvidia remains the undisputed champion of this AI revolution. The chipmaker became the first company in history to reach a $5 trillion valuation this month, a milestone that would have seemed impossible just two years ago. CEO Jensen Huang's explanation for the sustained momentum resonates across boardrooms: AI has created a 'virtuous cycle' where increased usage drives more investment, which improves the technology, which drives even more usage.
That cycle is playing out in real-time across Big Tech earnings. Companies announced massive increases in capital expenditure last week, with the majority earmarked for AI infrastructure. Meta is pouring billions into its Reality Labs division and AI training capabilities. Google parent Alphabet is expanding its data center footprint at breakneck speed. Microsoft continues its aggressive Azure AI buildout to support its ChatGPT integration.
This spending spree tells a different story than the dot-com bubble of the late 1990s. Back then, companies burned cash on SuperBowl ads and lavish offices with little revenue to show for it. Today's AI investments are generating measurable returns - AWS unit saw accelerating growth driven by AI workloads, while Copilot integration is driving enterprise adoption at unprecedented rates.
