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Stocks just finished off their best February since 2015 and settled at record highs.

And we all know the story: The Magnificent Seven have lifted the S&P 500 (and now the Nasdaq) higher and higher thanks to AI.

The intense concentration has been a consistent point of discomfort for many investors as the top-heaviness of a few big stocks feels naturally precarious.

2023 was about the Magnificent Seven. 2024 is about three. Not only is seven a small, undiversified number compared to, say, 500, but we’re really talking about the even more singular undiversified concept of AI.

To some extent, all-time highs will always look exuberant. These milestones are also the sweetest honey for market bears who can easily imagine falling to familiar territory just recently left behind.

But our Chart of the Week points to one metric that recasts this exuberance as almost mediocre.

A look at the S&P 500’s current rolling three-year average return shows the market’s rise over this period has been almost exactly average.

Currently, this return stands at around 30%; a year ago, it was 34%. The impact of the market’s crash in March 2020 inflated this measure to nearly 60% in March 2023.

As DataTrek's Nicholas Colas wrote this week, the average three-year price return since 1974 is 29% (8.9% per year, compounded). In that context, nothing about the current moment is remarkable.

Colas’s research into this metric found that at the 100% mark for three-year gains, “history says investors should be extremely wary.” (It's easy to remember too: "A double is a bubble," Colas points out.)

“If all you knew about the index was its 3-year return as of today, you would perhaps assume the last 36 months had been pretty routine,” Colas wrote. “Nothing in today’s analysis says we’re close to a bubble in US large caps.”

While there’s no questioning the outsized nature of the megacap contributions to the index, we’ve recently shed light on other factors boosting the market that aren’t AI hype, which remained squarely in focus throughout the earnings season.

But as we’ve pointed out, a sustained rally needn’t be a broad one anyway. The gains very well may be concentrated as some sink and some skip.

It’s a point Colas echoes as well: The index is “500 companies jostling for investors’ incremental capital. Enough manage to succeed that the index generally produces good 3-year returns.”

Ethan Wolff-Mann is a Senior Editor at Yahoo Finance, running newsletters. Follow him on Twitter @ewolffmann.

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