AI Rally Expands Beyond Tech Giants as Infrastructure Providers Take Center Stage

JPMorgan's Stephen Parker said that market leadership has broadened beyond the 'Magnificent Seven' companies, which have traditionally dominated the rally. According to Parker, the AI story is driving growth and efficiency across various industries, not just technology.

One of the strongest evidence for Parker's thesis is the record backlogs building across power, grid, and networking companies. Companies like Quanta Services (PWR) and GE Vernova (GEV) have seen significant orders and revenue growth in the second quarter. Quanta's backlog hit a record $53.44 billion, while GE Vernova posted Q2 orders of $24.2 billion.

Parker also noted that AI is driving legitimate business results across the market, not just from a capital spending perspective but also from a growth and efficiency standpoint. Consumer sentiment and behavior are robust, with consumer spending continuing to be strong. JPMorgan's (JPM) Q2 earnings backed up this trend, with CCB revenue at $20.3 billion, up 8% year-over-year.