An AI boom powers stock markets to record highs

An extraordinary boom in enthusiasm for artificial intelligence powered stock markets to record highs this year, as soaring demand for the chips and technology underpinning AI drove the shares of leading technology companies sharply higher and lifted broader markets to new peaks.

The rally was led by companies at the heart of the AI boom, particularly the maker of the specialised chips essential for training and running AI systems, whose shares surged as demand for its products soared and its valuation climbed to extraordinary heights, making it one of the most valuable companies in the world.

The enthusiasm reflected expectations that artificial intelligence would drive a wave of productivity gains, new products and economic growth, prompting massive investment in AI infrastructure and fuelling optimism about the prospects of the companies positioned to benefit.

The gains were concentrated heavily in a relatively small number of large technology companies, whose outsized influence on the major indices meant that their rise drove much of the overall market's advance, raising questions about the breadth and sustainability of the rally.

The boom also prompted debate about whether the enthusiasm for AI had become excessive, with some warning of the risk of a bubble reminiscent of past technology manias, while others argued that the transformative potential of the technology justified the optimism.

The AI-driven market rally became a defining feature of the year in finance, reflecting both the genuine promise of a transformative technology and the exuberance it inspired among investors. Whether the enormous investment and soaring valuations would ultimately be justified by the economic impact of AI remained an open and consequential question, but the boom underscored the extent to which artificial intelligence had come to dominate the outlook for technology, markets and the broader economy.