Imani Moise

The Nasdaq led the way, rising 4.5% over the week, while the S&P 500 grew 2.3%.

The Dow was up 0.2%.

Tech stocks stole the show this week, surging 7%, making it the best-performing corner of the S&P 500 by a mile.

The rally extended far beyond just the Magnificent Seven, as a wide range of tech companies from Uber to Pinterest reported better-than-expected earnings.

Even software stocks got a boost, after being beaten down in recent weeks due to fears that their products would eventually be replaced by AI.

Datadog was a top performer in the S&P this week.

Its shares soared 42% after the company reported stronger-than-expected revenue growth and said customers are increasingly using its tools to monitor AI infrastructure.

Cybersecurity company Fortinet jumped 32% after earnings also pointed to rising demand tied to AI.

But as the rally gains momentum, comparisons to the dot-com bubble are getting harder to ignore.

Many of today's hottest AI stocks resemble the market leaders of March 2000, right before the tech bubble burst.

Strategists at BTIG found the top-performing Nasdaq stocks this year have actually outpaced the gains of the Nasdaq's biggest winners during the peak of the dot-com era.

But unlike many internet companies during that boom, current AI leaders are generating enormous profits and posting strong earnings growth.

And for now, investors seem more focused on those results than fears of a bubble.

One company learned that even in an AI mania, investors are still being selective.

Palantir was one of the worst performing stocks in the S&P this week, despite reporting record revenue and profit on Tuesday.

The data analytics company has become one of Wall Street's favorite AI trades thanks to growing demand for software used by corporations and government agencies.

Analysts at Benchmark Equity Research said Palantir has effectively been priced for perfection, noting the company trades at roughly 98 times projected earnings over the next 12 months.

During the earnings call, executives tried to set the company apart from rivals that they accused of offering AI slop, while pitching Palantir's own platform as a no-slop zone.

Still, some investors are beginning to question whether Palantir software is truly indispensable or simply built on top of AI models that are rapidly becoming cheaper.

Palantir shares fell 4% over the week.