The rally is narrow but not irrational. A few leaders, especially NVIDIA and peers, are carrying index performance because they sit at the centre of real earnings growth, not just narrative.
Mallouk’s point has merit. The chip trade is still supported by genuine demand: hyperscaler capex, inference scaling, and supply constraints across GPUs, memory, and networking. That gives semis stronger near-term visibility than most sectors.
But the risk is concentration and expectations. When a small group drives the S&P 500 and Nasdaq Composite, the market becomes fragile. Any disappointment, even a “good but not great” quarter, can trigger outsized reactions.
So I would frame it this way:
Trend: still bullish, backed by earnings
Structure: increasingly fragile
Behaviour: late-cycle characteristics forming
Crowded trades can go further than expected, but upside becomes more incremental while downside becomes sharper.
I would stay invested, but avoid over-concentration in the obvious winners and be more selective with new entries.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
