According to Zhitong Finance APP, over the past five months, the S&amp;P 500 Index has seen a cumulative increase of over 31%, marking one of the strongest rebounds in nearly 20 years. As shown in the chart below, this performance is only surpassed by the rebounds during the 2008 financial crisis and the pandemic, which is remarkable.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005076676925.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005076676925.png"/>
For investors tracking major U.S. stock index ETFs, last week was another fruitful week. There are two main driving factors behind this: first, the market expects the Federal Reserve to begin a rate-cutting cycle this week; second, the strong earnings reports from companies involved in the artificial intelligence (AI) sector have ignited market optimism.
It is noteworthy that the current market optimism towards AI is not driven by news related to NVIDIA (NVDA.US), but rather propelled by Oracle's (ORCL.US) earnings report. Oracle not only announced better-than-expected results but also provided a highly confident earnings guidance, leading its stock price to surge over 40%. This performance has far-reaching implications for the financial markets, even allowing its founder to surpass Elon Musk and become the world's new richest person.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005102672156.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005102672156.png"/>
Is there a bubble in the current market?
Despite many analysts insisting that &#34;there is a bubble in the current market,&#34; the stock market continues to rise. The chart below compares the current AI boom with historical booms in the railroad, telecommunications, and shale oil industries.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005116660720.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005116660720.png"/>
From a market performance perspective alone, the &#34;bubble&#34; in the AI sector should have burst by now. However, investment research firm Multiplo Invest firmly believes that we are facing a true industrial revolution—AI will inject strong momentum into economic growth by enhancing productivity.
Some investors may think that the current market is more similar to the previous tech bubble. In this regard, Multiplo Invest provides a highly valuable comparison: one of the hallmark events of the internet era was the launch of the first browser, Netscape.
The firm states that comparing today's ChatGPT with Netscape from back then is of significant importance. The chart below compares the performance of the Nasdaq Composite Index after the launch of Netscape and the index's trajectory following the introduction of ChatGPT
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005132604561.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005132604561.png"/>
From this comparison, it is not difficult to see that asset prices still have further room for growth. According to Multiplo Invest, if investors continue to manage their portfolios with the mindset that &#34;there is a bubble in the market,&#34; they will miss out on more opportunities.
Interest Rate Cuts Drive Stock Market Upward
Multiplo Invest stated that while time will ultimately prove whether there is a bubble in the current AI sector, one thing is more certain: the likelihood of the Federal Reserve starting interest rate cuts this week is very high, and notably, the S&amp;P 500 index is currently approaching historical highs. This scenario has occurred multiple times in history and is the most noteworthy insight this week.
Data shows that since 1980, there have been 22 instances of &#34;the Federal Reserve cutting interest rates when the market is near historical highs.&#34; The data indicates that in these 22 scenarios, the S&amp;P 500 index averaged a 9.8% increase in the 12 months following the rate cuts. More importantly, in all 22 scenarios, the stock market achieved gains 12 months later. This data further supports Multiplo Invest's positive outlook on major U.S. stock indices.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005142275460.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005142275460.png"/>
What is the Target Level for the S&amp;P 500 Index?
Based on multiple valuation factors, Multiplo Invest has consistently reiterated a target level of 7095 points for the S&amp;P 500 index. However, the aforementioned statistics have prompted further reflection from the institution: the current S&amp;P 500 index is around 6600 points, and if we calculate a 9.8% increase over the next 12 months, the target level for the index will reach 7247 points by September 2026. This calculation also confirms Multiplo Invest's optimistic expectations for the market.
Potential Risks Facing the Bullish Viewpoint
Of course, the market is not without risks. There is currently a significant contradictory situation in the market: the U.S. Consumer Price Index (CPI) rose by 0.4% month-on-month in August, pushing the year-on-year inflation rate up to 2.9%. It is particularly noteworthy that this inflation level is the highest since January of this year.
Multiplo Invest stated that theoretically, now is not the best time to initiate interest rate cuts. However, the U.S. Bureau of Labor Statistics' revision of employment data shows that the labor market is performing weaker than expected, so the fact that inflation has not reached the target may not be sufficient to prevent the Federal Reserve from implementing interest rate cuts
In addition, the potential side effects triggered by tariff policies remain to be observed. The market also faces other unresolved challenges, such as the auto loan default rate, which has risen to its highest level in the past 14 years.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005167505556.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005167505556.png"/>
At the same time, risks such as the trend of U.S. debt and market concentration issues still exist. As shown in the chart below, the total market capitalization of the 10 largest companies in the U.S. has exceeded the total market capitalization of any single stock market globally, including China, the European Union, and Japan.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005176305486.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250916/1758005176305486.png"/>
Conclusion
Driven by market expectations for the Federal Reserve to cut interest rates this week, U.S. stocks have seen another rise. The scenario of &#34;stock indices approaching historical highs + Federal Reserve interest rate cuts&#34; has occurred multiple times in history, each time bringing positive effects to the stock market.
Oracle's stock price surged significantly due to market optimism about AI, and its founder has become the world's richest person as a result. However, many investors still firmly believe that &#34;there is a bubble in AI&#34; and have failed to fully seize the opportunities brought by the current rise in asset prices.
Based on the above analysis, Multiplo Invest reiterates its buy recommendation for tracking assets such as the S&amp;P 500 and other major U.S. stock indices. However, it should be made clear that there is never an &#34;absolutely ideal&#34; environment in the investment market—risks are always present

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Multiplo Invest believes that if investors continue to manage their portfolios with the mindset that "the market is in a bubble," they will miss out on more opportunities. Over the past five months, the S&P 500 index has risen more than 31%, marking one of the strongest rebounds in nearly 20 years, primarily driven by expectations of interest rate cuts from the Federal Reserve and strong earnings reports from AI companies. Oracle's earnings exceeded expectations, with its stock price soaring over 40%, and its founder surpassed Musk to become the world's new richest person. Although analysts believe there is a bubble in the market, Multiplo Invest firmly believes that AI will drive economic growth, and we are currently in an era of industrial revolution

- The S&P 500 index has risen over 31% in the past five months, marking one of the strongest rebounds in nearly 20 years, driven by expectations of an interest rate cut by the Federal Reserve and strong earnings from AI-related companies.  
- Oracle's impressive earnings report, which exceeded expectations and provided a confident outlook, significantly boosted its stock price and market optimism, even surpassing Elon Musk's wealth.  
- Despite concerns about a potential market bubble, Multiplo Invest remains optimistic about the S&P 500's future, projecting a target of 7247 points by September 2026, while acknowledging existing market risks.

When interest rate cuts meet new highs: Can the "AI bubble theory" also hinder the upward momentum of U.S. stocks?