Stock Market Hits Record $166 Trillion Valuation Amid AI-Fueled Growth

The global stock market has reached an unprecedented valuation of $166 trillion, representing roughly 137% of the world's economic output. This marks a significant increase from last year, with a jump of $32 trillion and a 23.6% growth in value.

This surge is largely driven by artificial intelligence (AI), which has added an estimated $27 trillion to the global market since late 2022. This represents a disproportionate amount of growth, as the 'Magnificent 7' cluster of mega-cap tech stocks have contributed more new market capital than the GDP of every country except the US and China.

The ratio of total stock market capitalization to GDP is known as the Buffett Indicator, named after Warren Buffett. It sits near all-time highs at 137%, which historically signals that equities are overvalued relative to economic fundamentals. This has led some analysts to warn about a potential correction in the markets.

The US accounts for around half of the world's stock market value, with between $75 trillion and $81 trillion of the total $166 trillion valuation. The correlation between stocks and cryptocurrencies is also worth noting, as the Nasdaq's performance has historically been linked to that of Bitcoin.