Stocks Keep Breaking Records Amid War and Economic Fears: Kevin O'Leary Says AI Is the Reason

The S&P 500 has spent much of the past two months near record territory, even as the war between the United States and Iran continues, and fighting in Ukraine drags on, and fresh data this week showed US wholesale prices rising at their fastest annual pace since November 2022. Kevin O'Leary says there is one reason markets keep holding up regardless: artificial intelligence.

In a video posted to X early on 12 June, the O'Leary Ventures chairman and Shark Tank investor laid out the case he has been making for months. 'You've got all this volatility. You've got all of these conflicts in the world, Ukraine, the Middle East, et cetera, and the market hits new highs all the time. Why is that?' he said. His answer pointed to the corporate balance sheet rather than the headlines.

'If you go down and look at all 11 sectors of the S&P 500, every single one of them has now adopted AI models into how they operate their companies,' he said.

O'Leary, widely known by his television nickname Mr Wonderful, said the pattern holds across his own portfolio of private businesses, which range from five to 500 employees and number more than 50 in total.

'Every one of us has increased margins and enhanced productivity using this tool,' he said. 'So instead of earnings being compressed during this period of uncertainty and rising interest rates, we actually are beating earnings estimates all because of this tool called AI.'

That last point is the core of his argument. Higher interest rates and geopolitical shocks would typically squeeze company profits. O'Leary's position is that AI-driven efficiency has offset that pressure, allowing firms to beat earnings forecasts at a time when many investors expected weaker results.

Why O'Leary Credits AI for the Market's Record Run

The broader market record supports part of that picture. The S&P 500 fell almost 10 per cent in late February and March, after US and Israeli strikes on Iran escalated into open war. By mid-April it had recovered those losses and closed above 7,000 for the first time.

Economists have pointed to several factors behind that rebound. Mark Zandi, chief economist at Moody's Analytics, told CNBC that investor enthusiasm for AI and technology stocks, which account for close to half of the S&P 500's total market value, has been one of the main forces keeping the index near its highs.

That concentration cuts both ways. If AI and technology stocks make up roughly half the index, strength in that group can lift the whole market even while other parts of the economy face pressure from inflation and conflict abroad.

The productivity gains O'Leary describes have also coincided with job cuts at several large technology firms, including Meta, Oracle, and Block, as companies turn to automation to cut costs. O'Leary has separately acknowledged that AI is displacing workers, while maintaining that the impact on corporate earnings is the bigger story for markets right now.

What O'Leary's AI Optimism Means for Investors

For everyday investors, the practical point is less about whether AI is helping markets and more about where that help is concentrated. A market driven heavily by one sector offers strong exposure to that theme, but it also means more of the index's performance depends on a smaller group of companies.

The timing of O'Leary's comments coincided with a busy week for markets. SpaceX priced its initial public offering at $135 a share, raising roughly $75 billion (£56 billion) and making it the largest IPO in US history, as AI-linked listings and investment continued to dominate trading. The producer price data and renewed tension over Iran landed in the same news cycle, the kind of backdrop O'Leary says the market has learned to absorb.

O'Leary's argument is that AI has changed how companies generate profit during periods of high rates and global instability. Through the spring of 2026, the S&P 500 has continued to trade near the record levels it reached in April.

Disclaimer: Our digital media content is for informational purposes only and does not constitute investment advice. Please conduct your own analysis or seek professional guidance before investing. Remember, investments are subject to market risks, and past performance does not guarantee future results.