The U.S. stock market has been on a tear, with the S&P 500 up nearly 90% since its rebound began at the end of 2022. Whether you call it a bubble or just a good old-fashioned bull market, the rally has been fueled by a potent mix: AI optimism, Federal Reserve rate cuts, steady economic growth, and rising profits across multiple sectors.
But here's the million-dollar question: how long can this party last?
The Rocket Ride—and the Worries
Markets have a way of climbing walls of worry, and right now, there are plenty of bricks in that wall. Concerns range from whether AI spending is sustainable, to the outlook for business investment and job growth, to the health of the credit market.
Still, most analysts agree these risks aren't likely to derail the rally in the near term. As one strategist put it, "Even if this is a bubble, bubbles can float higher for years before they pop." Translation: sitting on cash may not be the smartest play.
Private Credit Panic? Not Yet
The private credit market, now topping $1 trillion, has been a hot topic. This sector lends to businesses that can’t easily tap banks, often with less transparency. Recent defaults have spooked investors, but Moody’s and others note that U.S. banks’ direct exposure is limited.
For now, the system looks stable. Consumer and corporate credit conditions remain solid, unemployment is at 4.3%, wages are still growing, and banks like Wells Fargo even reported lower provisions for bad debts in Q3.
Fed to the Rescue
Another safety net: the Federal Reserve. The central bank is widely expected to cut rates at its October 28–29 meeting, which should help keep economic momentum alive. Lower borrowing costs could extend the runway for both consumers and corporations.
AI Spending: Overblown Fears?
Skeptics worry that hyperscalers like Alphabet (GOOGL) and Meta (META) are overspending on data centers, and that any pullback could hit chipmakers and AI beneficiaries. But FactSet data shows capex is expected to grow at double-digit rates through 2026. These companies also have long-term contracts, strong cash flow, and healthy balance sheets—not exactly signs of reckless gamblers.
"I'm not worried," said David Stubbs, chief investment strategist at Alphacore. "These contracts are with very large, profitable, high-quality companies."
History Says Bulls Can Run for Years
Looking back, bull markets often last far longer than skeptics expect. The 1982–1987, 1987–2000, 2002–2007, and 2009–2020 rallies all stretched for years. The dot-com boom, for example, lasted 13 years before the bubble burst in 2000.
By comparison, today’s bull market is only in its third year. Historically, the S&P 500 has delivered cumulative gains of over 100% during long bull runs.
"This bull market is still in its early stages and is likely to continue for at least a few more years," said Raz Pounardjian of Carnegie Investment Council, advising investors to stay in the market rather than risk missing out.
The Bottom Line
Yes, valuations are high. Yes, risks exist. But history, fundamentals, and Fed policy all suggest the U.S. stock market bull run still has legs. Whether you call it a bubble or a boom, the message is the same: don’t leave the dance floor too early—this music could play for a while.