Analysis: S&P 500 Uptrend Remains Intact, Bull Market Broadening Amid Tech AI Capex Shifts

The December 2, 2025, Seeking Alpha article argues the S&P 500’s uptrend remains intact, supported by improving economic fundamentals and market expectations of Federal Reserve (Fed) rate cuts [1]. A key observation is that major tech giants (Amazon, Google, Microsoft, Meta) are planning significant AI-related capex—exceeding $320 billion in 2025, up from $246 billion in 2024—which may limit further valuation multiple expansion for these companies [0]. On the day of the article’s publication, the cap-weighted S&P 500 (^GSPC) closed up 0.47% at 6,844.49, with the Technology sector leading gains (+0.97%), while the equally weighted S&P 500 (RSP) closed down 0.28% at $190.08 [0]. Market pricing as of late November 2025 indicated 80-88% odds of a 25-basis-point Fed rate cut in December, though the Federal Open Market Committee (FOMC) remained divided on the decision [0].

1. Long-Term vs. Short-Term Performance Disparity
   : The equal-weighted S&P 500’s slight decline on December 2 contrasts with the article’s thesis that it may benefit from the shift away from cap-weighted tech dominance as AI capex constrains tech multiples. This suggests short-term market dynamics may not yet fully reflect the anticipated sector rotation [0][1].
2. Fed Rate Cut Expectations as a Key Driver
   : Market optimism around the uptrend is closely tied to anticipated rate cuts, but the divided FOMC introduces uncertainty about the timing and magnitude of these cuts [0].
3. AI Capex as a Dual-Edged Sword
   : While heavy AI investment may limit near-term tech multiple expansion, it could drive long-term growth for tech giants if these investments yield expected returns, creating a nuanced outlook for the sector [0][1].

• Fed Policy Uncertainty
  : A divided FOMC could delay or forgo December rate cuts, which would dampen market optimism [0].
• Tech Capex Misallocation
  : If tech giants’ AI investments fail to generate anticipated returns, it could weigh on their stock performance [0][1].
• Deteriorating Economic Fundamentals
  : A reversal in the improving economic conditions cited as supporting the uptrend could undermine the S&P 500’s momentum [0].

• Sector Rotation
  : Lagging sectors may benefit as investor focus shifts from tech giants facing multiple compression to undervalued areas of the market [1].
• Equal-Weighted S&P 500
  : This index may outperform its cap-weighted counterpart over time as tech’s disproportionate influence wanes due to AI capex constraints [1].

This analysis synthesizes the Seeking Alpha article’s thesis with market data and macroeconomic context. The S&P 500’s uptrend is supported by improving fundamentals and Fed rate cut expectations, but tech giants’ AI capex may limit their near-term multiple expansion. The equal-weighted S&P 500 and lagging sectors present potential opportunities, while Fed policy uncertainty and tech capex risks require close monitoring. No investment recommendations are provided.