To The Moon

The first half of 2026 is officially over.

As of June 30, $S&P 500(.SPX)$ is up 8.7% year to date, $NASDAQ(.IXIC)$ has gained 11.1%, $Dow Jones(.DJI)$ is up 8.6%, while the Russell 2000 has surged more than 20%, making small caps the clear leader.

The index looked calm, but stock picking was anything but. AI hardware names produced multiple multi-baggers, while software stocks briefly erased nearly $1 trillion in market value. The Philadelphia Semiconductor Index swung from gains of more than 6% in a single day to losses approaching 8%.

What Happened in the First Half?

1. The Iran conflict pushed oil prices higher and revived stagflation fears.

2. Kevin Warsh took over as Fed Chair and, with one press conference, shifted the market from pricing in rate cuts to pricing in rate hikes.

3. SpaceX completed the largest IPO in history.

4. And markets briefly embraced the narrative that AI would replace software.

The Real Theme: Money Shifted From Buying GPUs to Building AI Factories

For the past few years, the biggest bottleneck in AI was compute, making NVIDIA GPUs the scarcest asset in the market.

But in 2026, as more GPUs were deployed, the next bottlenecks became impossible to ignore.

HBM; Server memory; Enterprise SSDs; Networking; Power; Cooling.

Capital began rotating away from simply buying GPUs toward building the entire AI infrastructure stack, searching for the next critical shortage.

Memory turned out to be that shortage. As AI models became larger and more frequently deployed, demand for storing, moving, and accessing data exploded.

The four major storage companies dominated the performance rankings among U.S. companies with market caps above $50 billion (returns through June 30):

• $SanDisk Corp.(SNDK)$: +764% (NAND flash)

• $Micron Technology(MU)$: +301% (DRAM + HBM)

• $Western Digital(WDC)$: +278% (Enterprise SSDs)

• $Seagate Technology PLC(STX)$: +252% (High-capacity HDDs)

Together, they cover nearly every layer of AI data-center storage.

It wasn’t just memory, AI infrastructure leaders also delivered spectacular gains

• $Intel(INTC)$ +257%: A classic turnaround story fueled by strategic investments, Intel 18A, advanced packaging, and renewed confidence in U.S. semiconductor manufacturing.

• $Dell Technologies Inc.(DELL)$ +229%: Benefiting from surging demand for integrated AI servers and rack systems.

• $Marvell Technology(MRVL)$ +227%: Riding custom AI silicon and high-speed networking, with Jensen Huang publicly calling it a potential trillion-dollar company during COMPUTEX.

• $Applied Optoelectronics(AAOI)$ (+331%) and $Lumentum(LITE)$ (+131%) surged as optical interconnects became another critical bottleneck alongside storage.

• $Bloom Energy Corp(BE)$+217%: Providing rapidly deployable on-site power, reinforcing the idea that “the endgame of AI is electricity.”

• $ARM Holdings(ARM)$ +214%: Cloud providers increasingly adopted Arm CPUs to lower power consumption and total ownership costs, while Arm expanded further into Agentic AI processors.

• $NEBIUS(NBIS)$ +212%: Building and operating AI data centers and cloud infrastructure.

Money didn’t leave AI. It simply expanded from GPUs into storage, networking, servers, power, and cloud infrastructure. That suggests the AI bull market isn’t over. It’s just entering its next phase.

The Second Half Is About Earnings, Not Multiple Expansion

Wall Street remains broadly constructive, but there’s one common message. The next leg higher has to come from earnings.

Not simply higher valuations.

Goldman Sachs raised its year-end S&P 500 target to 8,000, projecting full-year EPS of 340. JPMorgan sees 7,800 with EPS reaching 350.

Industry analysts in aggregate predict the S&P 500 will see a price increase of 21.2% over the next twelve months. This percentage is based on the difference between the bottom-up target price and the closing price for the index as of yesterday (June 25).

Meanwhile, Amazon, Microsoft, Google, and Meta are expected to spend between $670 billion and $800 billion on AI infrastructure in 2026, an increase of more than 80% year over year.

This earnings season won’t simply be about revenue. Investors will want answers.

• How much of cloud growth is coming from AI?

• Is AI improving advertising monetization?

• Are enterprise AI products generating meaningful paid adoption?

• Can storage shortages persist?

• Will AI server orders remain strong?

• Can power infrastructure projects stay on schedule?

• Will hyperscalers continue increasing capex?

The answers to those questions will determine whether this AI rally still has room to run.

Discussion

How has your first half of 2026 gone?

The major indices gained only around 8%, yet memory and AI infrastructure stocks delivered returns of several hundred percent. Did you outperform, or were you stuck in software names or gold?

Will Q2 earnings confirm AI’s earnings power—or expose an AI bubble?

For the second half, would you rather keep buying memory stocks, or rotate into the next AI infrastructure themes like power generation or cloud?

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