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We're Hitting Phase 2 of the AI Boom
That's what my guest says this week.
And Phase 2 has big implications for the years ahead.
After all, we're currently in a ripping bull market. And while many people think stocks have moved too far, too fast... they may still have room to run (and a lot of room at that).
That's why I brought in Brett Eversole, editor of True Wealth.
In 2023, Brett told his readers that the Dow Jones Industrial Average was headed for 150,000... way above its level of around 30,000 at the time.
So far, the Dow has already reached 50,000...
This isn't a short-term outlook. Brett isn't putting a 2026 price target on the indexes like all the investment banks do.
He's talking about something bigger...
See, when you study enough market history, you can see massive, long swings in the market where economic growth, technological change, and widely available capital drive stocks up for decades.
That's what Brett sees happening today.
Three Big Ideas About the Bull Market
The AI Boom Has Finally Flipped From Spending to Selling
For the past two years, the AI story was simple: Big companies spend enormous sums, and investors hope it pays off someday.
That phase isn't over. Goldman Sachs (GS) expects companies will spend nearly $7 trillion on AI data centers over the next five years.
But Brett says we're beginning to enter a second phase...
AI sales are now booming alongside spending.
Look at Anthropic, the maker of the Claude family of AI models. By May, its annualized run rate on sales had leapt from about $9 billion a year ago to $47 billion. The company is selling real, useful products to real enterprise customers. Claude, Claude Code, and Claude Cowork aren't just chatbots. They're enterprise tools that help customers get things done today.
Importantly, the shift from spending to selling also acts as a backstop. As long as revenue keeps validating the spending, the $7 trillion build-out stays funded. The AI boom can keep feeding itself.
Fundamentals Show This Isn't a Bubble
Whenever a stock or sector moves quickly, people want to call it a bubble.
A bubble is when a stock's price rises so far past what its fundamentals could ever justify that there's no future good enough to make the price make sense.
Cisco Systems (CSCO) in 2000 is a prime example of this. From 2000 to 2010, Cisco grew revenue about 20% a year, a genuinely great run. But the stock still fell 70% over that period because investors had already priced in results the company could never deliver.
That's not what's happening today...
In the first quarter of 2026, average earnings for companies in the S&P 500 Index grew 28%, blowing past estimates of 13% just weeks earlier. Estimates for the second quarter call for 23% growth. And despite all that, the index trades for around 22 times forward earnings – expensive against its 100-year average, but roughly in line with the past five years once you account for the growth behind it.
If you look at individual AI stocks, the fundamentals are even stronger.
Micron Technology (MU) is up nearly 700% over the past year. Its revenue is up 300% to 400%. Profit margins jumped from about 20% to 70%. And profits are up around 1,300%.
The stock rose a lot. But it actually got cheaper... because the business grew faster than the share price did.
Brett calls this an anti-bubble.
And companies like Ciena (CIEN), Dell Technologies (DELL), and Hewlett Packard Enterprise (HPE) are all seeing the same pattern as AI spending finally reaches beyond a handful of mega-cap winners.
None of this means prices can't fall. But when people call this a bubble, they may just be rationalizing the fact that they missed this historic move.
We're 13 Years Into an 18-Year Bull Market – And Dow 150,000 Isn't Crazy
If you look back far enough, you'll see that the stock market moves in long, structural waves that last well over a decade.
From 1929 to 1949, the S&P 500 returned nothing – it was flat for two decades.
That was followed by 19 years of 16% annual gains... then 14 years of the market going nowhere... then 18 years of 20% annual returns... then 13 years of near-flat performance.
These long bull runs are called "secular" bull markets. And we've been in one since 2013, with the market climbing about 15% a year.
Historically, these cycles run about 18 years before they end in a euphoric peak. At year 13, this one likely still has room. Brett expects we have another four to seven years.
And if this bull run were to match the others, that means the Dow would land somewhere between 130,000 and 200,000. That's well above its current levels of around 53,000.
Of course, every one of these cycles ends the same way... with a mania peak followed by a lost decade where stocks go nowhere for years.
That could make this the last bull run for many investors.
Watch to Learn More
To learn more, check out my discussion with Brett. We sit down in this week's Top Stocks episode to further discuss why thinking in terms of a secular bull market is the best way for investors to get ahead... and how AI is powering the final boom.
You can watch the entire episode on our YouTube page by clicking the image above. Be sure to like and subscribe to get more of our videos.
Straight to the Source
- FactSet publishes a weekly Earnings Insight report on current market trends, earnings growth, and revenue expectations for S&P 500 companies. Pages 6 and 7 show how estimates are climbing and which sectors are seeing the biggest changes.
- Brett has a more in-depth presentation showing exactly why this bull market will continue and how investors can take full advantage.
- And finally, if you're not already receiving the Stansberry Digest, make sure to sign up for free here.
Good investing,
Matt Weinschenk
Publisher and Director of Research
What do you think about Top Stocks? Send any and all feedback to thisweek@stansberryresearch.com. We read every e-mail you send in.
