AI stocks have provided the juice for this bull market, which just turned four. Expectations for strong tech earnings, combined with far more reasonable valuations than just a few months ago, could push the market even higher -- despite worries about concentration risk.

"The fingerprints of the AI trade are everywhere," said Nicholas Colas, co-founder of DataTrek Research, in a report Tuesday. But the question now is whether investors should continue to bet on AI or start looking elsewhere.

Concentration is a clear concern for anyone primarily investing in the market-cap weighted S&P 500, with the top 10 stocks making up about 40% of the index. And most of those stocks are inextricably linked to AI; it's the Magnificent Seven plus Broadcom and Micron.

But given how strong earnings growth for tech and communication services stocks are expected to be for the rest of the year and throughout 2027, it doesn't seem prudent to give up on the current leaders just yet.

"We strongly prefer the market cap weighted S&P 500," Colas wrote, adding that "the trillions of dollars being invested in AI have given the world's surplus capital a destination aside from sovereign debt."

Others argue that investors need to stay on board the AI train too, especially since valuations for the tech-laden S&P 500 have actually fallen in recent months. The S&P 500 is now trading for about 19 times earnings estimates for the next 12 months, down from a multiple of around 22 at the start of the year.

So while concentration is clearly an issue, it may not be enough of a risk to dissuade investors from maintaining the status quo. That's especially true if the Federal Reserve is willing to not go overboard with interest rate hikes, as the market now expects.

And that's been led by a pullback in tech valuations. The Roundhill Magnificent Seven ETF currently trades for 26 times forward earnings estimates, compared to a price-to-earnings ratio of 32 in January.

"AI has transformed market leadership, with a handful of mega-cap companies driving an outsized share of returns and market value," said Angelo Kourkafas, a senior global strategist with Edward Jones.

"Growing profits and a Fed that may be looking to tap the brakes rather than slam on them suggest the bull market may still have room to run," he added.

The rally began on Oct. 12, 2022, more than a month before ChatGPT's launch. Since then, AI's influence on the market has been undeniable.

The best-performing stocks in the S&P 500 during this stretch all have ties to AI. Data analytics software company Palantir, which went public in September 2020 and was added to the S&P 500 in September 2024, has soared nearly 2,490% since Oct. 12, 2022.

Vertiv, a data center infrastructure company that has been in the S&P 500 since March of this year, has skyrocketed almost 2,100%. Nvidia, Micron and Dell round out the top five in the index, with the three surging between 1,608% and 1,868%.

Other top performers in the S&P 500 for the past four years have wowed Wall Street thanks to AI as well, such as HVAC/cooling company Comfort Systems, off-grid power leader Bloom Energy and hard disk drive manufacturers Western Digital and Seagate. All four have posted quadruple-digit percentage returns since October 2022.

Those gains don't necessarily mean the rally is exhausted. With analysts expecting annual earnings growth of nearly 33% for the S&P 500 this year and another 16% increase in 2027, stocks may continue to climb the proverbial wall of worry.

"This rally was born into one of the most aggressive Fed tightening cycles in modern history and has endured a vast wall of worry throughout," said Mark Hackett, chief market strategist for Nationwide, in a report Monday, referring to the seven rate hikes by the Fed in 2022. "Despite the consistent move higher, pessimists remain vocal."

Hackett added that investors shouldn't be worried that stocks are due for a major correction or worse.

"This is an exceptional run, but not a historical outlier, as it ranks around the sixth-best bull market by gain and eighth-longest since World War II," he wrote.

So even though the AI rally is now entering its fifth year, it may not be even close to being on its last legs.