The major U.S. stock indexes closed October higher, with Big Tech’s AI spending sparking debate on a potential market bubble. Tech stocks comprise over 35% of the S&P 500, and AI investment drove two-thirds of the index’s Q3 profit growth. Some analysts warn of a possible correction as valuations soar.

Four of the “Magnificent Seven” tech giants reported earnings, with AI spending spooking some investors but emboldening others. Federal Reserve Chair Powell’s comments and President Trump’s trade truce with China influenced market direction. Stock valuations are high but supported by strong fundamentals, maintaining a wide premium for growth stocks.

Compared to the dot-com era, current tech spending is concentrated in cash-rich companies with solid business models. Despite warnings from some analysts, other experts argue that the stock market has been in a price bubble for over a year, with stretched valuations detached from fundamentals. The debate continues on the potential impact of AI on market transformation. All three major U.S. stock indexes closed October on a positive note. Investors are waiting for key economic data releases this week, including ADP employment and ISM services data, amid government shutdown. Companies like Amazon and UPS have announced significant job cuts, impacting the labor market. Earnings to watch include Palantir, Uber, Qualcomm, and DraftKings.

Read more at Yahoo Finance: Is Big Tech’s soaring AI spending creating a bubble? Here’s what it means for stocks.