After a blockbuster first-half rally driven by AI frenzy, the biggest question for investors is whether the market uptrend will continue for the rest of the year.

Just five mega-cap companies — NVIDIA (NVDA Quick QuoteNVDA - Free Report) , Microsoft, (MSFT Quick QuoteMSFT - Free Report) , Apple (AAPL Quick QuoteAAPL - Free Report) , Amazon (AMZN) and Meta (META Quick QuoteMETA - Free Report) — accounted for almost 60% of the gains this year, per FT. AI darling NVIDIA alone drove about 31% of the advance.

Historically, a strong first half bodes well for stocks for the rest of the year. Trillions of dollars remain parked in money market funds and other cash equivalents. A portion of this capital could be deployed into stocks, potentially fueling further gains when the Federal Reserve pivots to rate cuts.

The investment in AI-related companies is still in its early stages. I believe AI presents a groundbreaking opportunity to significantly boost productivity across industries.

Furthermore, while the valuations of the Magnificent 7 stocks appear stretched compared to the rest of the S&P 500, they remain below their pandemic peak and pre-rate hike levels, according to SSGA research. This rally is attributed more to strong growth than to multiple expansions.

At the height of the dot-com frenzy, Cisco's (CSCO Quick QuoteCSCO - Free Report) shares were trading at roughly 130 times its forward earnings, whereas NVIDIA is trading at around 47 times.

Meanwhile, the earnings outlook continues to improve. For the Magnificent 7 stocks, Q2 earnings are expected to be up +25.5% on +13.2% higher revenues, according to Zacks Earnings Trends.

To learn about the Invesco NASDAQ 100 ETF (QQQM Quick QuoteQQQM - Free Report) , Vanguard Mega Cap Growth ETF (MGK Quick QuoteMGK - Free Report) and Roundhill Magnificent Seven ETF (MAGS Quick QuoteMAGS - Free Report) , please watch the short video above.