The AI craze has returned to Wall Street — and investors are buying back in.

Standout quarterly results from Microsoft (MSFT) and Alphabet (GOOG, GOOGL) plus a well-received IPO debut for Rubrik (RBRK) have put the AI narrative back on track, sparking renewed confidence that big tech’s expensive bets on splashy tools is boosting growth.

Alphabet shares soared to an all-time high on Friday, closing above a $2 trillion market cap for the first time. Microsoft shares ended up 1.8%, sporting a market a shade over $3 trillion.

“The AI investment story is intact,” BMO Wealth Management U.S. chief investment officer Yung-Yu Ma told Yahoo Finance.

Outperformance by Microsoft and Alphabet, along with Elon Musk's automaker turn AI play Tesla (TSLA), pushed the S&P 500 (^GSPC) and Nasdaq (^IXIC) to their best weekly performance this year.

“They're delivering on earnings,” HSBC’s Nicole Inui told Yahoo Finance. “This is a secular growth story, and we think the sector continues to stay strong over the second half of the year.”

Results from Microsoft and Google gave Wall Street an early glimpse at how AI will drive stocks for years to come. Microsoft said AI services accounted for 7 percentage points of the 31% revenue jump in its Azure cloud division.

Meanwhile, increasing contributions from AI helped Google’s cloud revenue surge 28%, compared to a year ago.

“The commentary from both Google and Microsoft tells us that there is real demand for AI,” RBC Capital Markets analyst Rishi Jaluria told Yahoo Finance. “It's not just hype, it's not just people talking about it. There's actual capital being put to work.”

In a note to clients this week, Bank of America’s Michael Hartnett wrote that “narrow mega-cap growth leadership” will remain intact until threats of a recession materialize.

And the AI opportunity goes far beyond Microsoft and Google — the two companies often viewed by Wall Street as leaders in the AI race.

RBC Capital Markets internet analyst Brad Erickson told Yahoo Finance that Meta’s (META) selloff following earnings was an “overreaction,” and believes AI will be a “transformational driver" for the company.

“We’d be buying it,” Erickson said.

The rally in several Mag 7 stocks arrives ahead of key results from Amazon (AMZN) and Apple (AAPL) this coming week — two earnings reports that will be another critical test for the AI tech trade amid sky-high valuations.

Curious on the best Mag 7 name to trade in May amid the acronym's comeback? On the latest episode of the Opening Bid podcast, we discuss just that. Tune in below.