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Triple-digit stock gains: History says not a bubble yet
7 Jun
Summary
- Top S&P 1500 stocks gained 240% in 2025, less than 1999's peak.
- Triple-digit leaders aren't automatically a market bubble signal.
- Today's rally is thinner when AI winners are excluded.
The current stock market rally, marked by significant gains in top performers, is being scrutinized for potential bubble characteristics. In 2025, the average top-performing stock within the S&P 1500 index achieved a remarkable 240% increase. This broad US market benchmark, encompassing large, mid, and small-cap companies, represents approximately 90% of the US market capitalization.
Historically, triple-digit stock gains have not automatically signaled a bubble. Since 1996, the average top-10 stock in the S&P 1500 has risen about 220% in a calendar year. The distinction between a strong rally and a bubble lies in the divergence between winners and losers. In 2025, the gap between the top and bottom 10% of stocks was approximately 125 points, falling below historical averages and significantly less than the late 1990s peak.
However, the influence of AI in the latest rally warrants caution. When these AI-driven winners are excluded, the market's breadth appears considerably thinner, suggesting a less robust underlying performance. While the current market has not reached the extreme divergence seen during the dot-com era, its concentrated nature in certain sectors is a point of concern.
