My 3 year old son is a big fan of the movie Toy Story. Often, our living room turns into "Andy's room" with Woody, Buzz Lightyear, Mr. Potato Head, Slinky Dog, and the rest of the gang scattered across the floor. He grabs Buzz, climbs onto the couch, and yells "To Infinity and Beyond!" as he launches himself through the air towards the cushions below.

As I was thinking about the current stock market environment recently, I realized that phrase may be one of the best ways to describe what we are seeing unfold in certain sectors of the market today.

Interestingly, there may be an even deeper connection.

The original Toy Story was released in 1995, right in the middle of one of the greatest technology-driven bull markets in modern history. The internet was beginning to reshape the economy, personal computers were spreading rapidly, and investors became captivated by the idea that technology would change everything.

They were right.

But eventually, excitement turned into speculation. By the late 1990's, capital was pouring into nearly anything tied to the internet, regardless of whether the underlying businesses were profitable or sustainable. When the dot-com bubble burst in 2000, many of those speculative companies disappeared entirely.

Importantly, however, the internet itself was not the problem. The technology ultimately changed the world exactly as many believed it would. The issue was that investors temporarily lost discipline and pushed valuations to unsustainable levels.

Today’s AI market shares some similarities, but there are important differences as well.

The current leaders are concentrated less in speculative startups and more in established companies building the physical infrastructure required to power artificial intelligence: semiconductors, memory, optical networking, data centers, cooling systems, and power management.

In many ways, today’s market resembles the early infrastructure phase of the internet buildout. AI models require enormous amounts of compute power, advanced chips, memory, networking equipment, and entirely new data center architecture. Every layer of that ecosystem is experiencing explosive demand simultaneously.

As a result, many of the market’s largest gainers this year have come from areas most investors barely discussed a few years ago.

Top 10 Companies in the S&P 500 in 2026

Source: Factset

Every single company in the top 10 of the S&P 500 this year is directly tied to AI infrastructure.

Meanwhile, many traditional sectors and slower-growth companies are being left behind as capital flows aggressively toward AI-related opportunities. Many of the largest companies in the world (Microsoft, Meta, Tesla, Berkshire Hathaway, Visa, JP Morgan, etc.) are actually negative so far this year.



Of course, stocks do not actually go “to infinity and beyond.” History reminds us that even transformational technologies experience periods of excess enthusiasm, sharp volatility, and eventual leadership changes. Some of today’s winners will likely become foundational businesses for the next decade. Others may eventually prove to have benefited from temporary speculation and overly optimistic expectations.

If you've seen the movie Toy Story, you remember the moment when Buzz appears to soar through the air and Woody responds, “That wasn’t flying. That was falling with style.”

Markets can sometimes behave the same way.

During periods of excitement and momentum, it can become difficult to separate sustainable long-term opportunities from temporary speculative excess. Strong price movement alone does not guarantee durable investment success.

That is why discipline, diversification, and valuation awareness remain critically important.

Our focus remains on identifying durable long-term opportunities while avoiding the temptation to chase momentum blindly. We continue to actively monitor developments within the AI ecosystem and broader market landscape while maintaining a disciplined investment approach centered on long-term compounding, active management, and risk control.

The opportunities surrounding artificial intelligence are significant, but so is the importance of maintaining perspective when enthusiasm becomes elevated.

As always, please don’t hesitate to reach out with any questions.

Kent

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Kenneth C. Brace, CIMA® 

Vice President, Investments / Crescent Wealth Management

Address: 124 Verdae Blvd., Ste. 105, Greenville, SC 29607

Direct: 864.900.4905 Office: 864.464.9626

Email: kent@crescentwm.com   Website: www.crescentwm.com

Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC. 

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