(The opinions expressed here are those of the author, a columnist for Reuters.)

ORLANDO, Florida  - A virtuous cycle is building on Wall Street. Sky-high expectations for corporate earnings growth and investor returns are driving benchmark indices into the stratosphere, pushing investor bullishness ​even higher. 

Is this the "boom loop" that Bank ⁠of America analysts have coined - or is it sowing the seeds of an inevitable reversal that could trigger a potentially turbulent "doom loop"?

It depends on how investors ‌interpret the signals.

Below is a series of charts and graphics highlighting a few key trends behind today's eye-popping headline index numbers. Do these stretched metrics indicate that the market is dangerously overvalued, or do they ​signal that we're in the early stages of an artificial intelligence-fueled hyper-bull market?

That's the trillion-dollar question.

ULTRA-LOW DIVIDEND YIELDS

The S&P 500 dividend yield - total dividends divided by the value of the index - is currently just ​1.1%, ​barely 50 basis points off the lowest level in a half century and the lowest since 2000.

A higher S&P 500 dividend yield typically indicates that the index may be cheap, and vice versa. But a lower yield may also simply reflect the fact that dividends make up a smaller share of investors' total returns ⁠than in the past.

Regardless, it certainly suggests that U.S. equities are pricing in a lot of optimism. As a reminder, the last time dividend yields were this low was 2000, when the dotcom bubble burst.

SKY-HIGH EARNINGS ESTIMATES

The degree to which the U.S. earnings outlook has brightened in recent weeks is astonishing. First-quarter earnings per share (EPS) growth is now projected at nearly 28%, according to LSEG I/B/E/S, almost double the 14.4% consensus forecast on April 1.

Big tech is responsible for much of that. Communication services earnings are expected to rise over ​55% from the fourth quarter of last ‌year to almost $100 ⁠billion in the first three months of ⁠the year. Information technology is expected to grow nearly 52%, lifting earnings to over $189 billion.

The latest boost to full-year 2026 earnings, however, comes courtesy of the energy sector, where analysts are ​expecting over 46% EPS growth this year. On April 1, the consensus estimate was 18%, and on January 1 it was under 8%.

NEGATIVE ‌EQUITY RISK PREMIUM

The so-called "equity risk premium" – the difference between equity yields and bond yields – has fallen below zero ⁠and is now the most negative since July last year, fast approaching the 2024 low of minus 0.7%. The last time the ERP was more negative was 1999.

A negative ERP can be interpreted as a sign that stocks are expensive or that bonds are cheap. Or both. Of course, prices may not be stretched at all if they are supported by sound fundamental reasons.

What's the current verdict? Again, it depends on whether you buy the narrative that the AI tech boom will continue driving an earnings bonanza.

RECORD-BREAKING AI CAPEX

The U.S. is undergoing one of the biggest corporate investment booms in history, as the megacap hyperscalers build the infrastructure that will underpin the AI revolution. Today's buildout is bigger than the Space Race or the Manhattan Project and is reminiscent of the railroad boom in the 19th century.

Forecasts on how high this spending will go were already off the charts, but analysts at Morgan Stanley and Goldman Sachs just raised theirs even higher.

Morgan Stanley's team now sees the five major U.S. hyperscalers' AI capex topping $800 billion this year ‌and $1.1 trillion next year, up from previous forecasts of $765 billion and $950 billion, respectively. Goldman's analysts expect cumulative AI infrastructure ⁠spending to hit a whopping $7.6 trillion by 2031.

These astounding figures underpin both the bullish and bearish market takes.

The bull asks how ​investment on this scale can create anything other than a record-breaking run on Wall Street?

But the bear questions how it will be funded, and, more importantly, whether these gargantuan outlays can possibly generate a sufficient return on investment.

The answers to those questions will largely determine how Wall Street and the U.S. economy fare in the years ahead.

(The opinions expressed here are those of the ​author, a columnist for Reuters)

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(By Jamie McGeever Editing by Marguerita Choy)