Sam Altman says there’s an AI bubble. What Wall Street thinks.

Tech earnings have given investors a lot to celebrate over the last couple of weeks. Hyperscalers such as Microsoft, Alphabet, and Amazon.com posted better-than-expected earnings growth. The AI giants, including Meta Platforms, also committed to spending billions more on AI infrastructure in the months ahead.

“These huge investments support earnings because they are revenue for someone, and they help drive productivity gains and boost profit margins—not just for the technology companies but for all of corporate America," wrote Jeff Buchbinder, chief equity strategist at LPL Financial, on Monday.

As of Friday’s close, the S&P 500’s market cap gain for the year was $4.865 trillion, according to Dow Jones Market Data. The Magnificent 7 has contributed roughly 43% of that.

The market cap value of the S&P 500 as of Friday’s close was $54.67 trillion, while the market cap for the Mag 7 was $19.68 trillion, or 36% of the S&P 500’s market cap.

Valuations are also high. The S&P 500’s forward price to earnings valuation is 22.5 times. Six of the Mag 7 stocks are trading at higher multiples than that.

Nvidia is trading at 34.9 times earnings expected over the next 12 months; Microsoft is at 32.7 times; Apple at 29.6 times; Amazon at 31.7 times; Meta at 26.1 times; and Tesla at 151.6 times forward earnings.

Apple, Meta, and Tesla are also trading above their five-year historic averages.

Other tech stocks are pricey, too. Netflix is trading at 41.2 times forward earnings, Oracle at 34.5 times, and Broadcom at 38.2 times.

According to an article from The Verge on Friday, OpenAI Chief Executive Sam Altman told reporters that he thinks the AI market is in a bubble.

“Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes," Altman said, according to the article. Barron’s has reached out to OpenAI for comment.

On top of concerns that near-term expectations for AI stock returns are too high, the broader economic environment is uncertain. The July jobs report was a disappointment, and May and June revisions to the downside were a shock. Wholesale inflation came in hotter than expected for July, and the most hefty of President Donald Trump’s tariff policies have recently started to go into effect.

Wall Street is now looking to the Federal Reserve’s monetary policy symposium this week, where Chair Jerome Powell could possibly offer a more hawkish view on rate cuts than investors might want to hear.

This puts highly valued tech stocks at risk.

“If everybody is fully invested, or nearly fully invested in a small cadre of very highly valued stocks, who’s there to buy them if they hit an air pocket or sentiment changes?" Steve Sosnick, chief strategist at Interactive Brokers, told Barron’s on Monday. He added that it’s like if there’s an “overcrowded building and everybody needs to rush to the exits, people get trampled, and that is the risk here."

Not everyone on Wall Street is concerned. Richard Saperstein, chief investment officer at Treasury Partners, wrote on Monday that “big technology stocks have led the market higher and will continue to dominate market performance. We expect continued earnings growth, reinvestment of cash flows and expansion of their globally dominant footprints."

Saperstein noted that investors should remain fully invested in U.S. stocks with a concentration in large-cap technology stocks.

“Stocks will likely benefit from deregulation, onshoring and capital expenditure expensing which will eventually become a tailwind for economic growth," Saperstein added.

Write to Angela Palumbo at angela.palumbo@dowjones.com