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As many readers will have heard by now, Big Tech companies are set to spend a ton of money this year on AI.

As chronicled by Yahoo Finance’s
Laura Bratton
,
Ethan Wolff-Mann
, and
Dan Howley
, the so-called hyperscalers of Microsoft (
MSFT
), Alphabet (
GOOGL
,
GOOG
), and Amazon (
AMZN
), along with social giant Meta Platforms (
META
), are set to invest a collective $325 billion in the coming year.

The stock market reaction to these companies’ announcements has been mixed at times in the last few weeks, and how exactly these investments turn into bottom-line results for these companies largely remains to be seen.

But for the overall stock market, the direction of this investment matters much less than the particulars.

Speaking with
the Financial Times in a wide-ranging interview published this weekend
, Arm Holdings (
ARM
) CEO Rene Haas said any worries about the future of AI will be answered by the spending plans outlined by these Big Tech leaders.

“The canary in the coal mine to look at is when [tech bosses] Satya Nadella or Sundar [Pichai] or [Mark] Zuckerberg say, ‘You know that $80bn of capex I said I was going to do? I think I’m going to cut that by two-thirds,'” Haas said. “That’s what you need to look for.”

Right now, these leaders are giving the green light to a stock market that remains powered by AI trade.

Earnings growth from tech giants like those mentioned above, along with Nvidia (
NVDA
) and a handful of others, have helped explain away fears about a stock market that is
expensive by historical standards
.

Over the long run,
earnings growth powers stock prices
. And the beauty of buying the S&P 500 (
^GSPC
) is that where exactly that earnings growth comes from doesn’t matter so long as it exists.

The bottom-line performance of the “Magnificent Seven” has, over the last two years, even managed to mask an
outright earnings downturn for the rest of the index, the “S&P 493
.” That earnings growth would pick up to include these laggards only proved an additional boost for an already-buoyant investor class.

Seen more cynically, the spending plans of a handful of tech giants playing by their own rules serve as yet another concentration risk for a market already full of them.

Whether it’s earnings growth or market cap or investing plans, shares in a small number of companies are setting the tone for a large swath of the stock market, for better or worse.