To The Moon

Monday’s session once again confirmed a trend that is becoming increasingly difficult to ignore: artificial intelligence remains the main engine behind the U.S. market rally.

With a relatively light economic and earnings calendar this week, investors have once again turned their attention toward the theme dominating markets: AI and the growth opportunities it continues to create across the technology sector.

The Dow Jones gained 0.18%, while the $S&P 500(.SPX)$ rose 0.66%. But the Nasdaq stood out, climbing 1.05% and reaching its 23rd record close of 2026. $NVIDIA(NVDA)$ $Microsoft(MSFT)$ $Apple(AAPL)$

AI Remains the No. 1 Market Catalyst

AI

The renewed strength in technology stocks comes despite the pressure that rising interest rates have recently placed on markets.

Yet the major U.S. indexes have remained remarkably resilient, largely because of their heavy exposure to technology companies, businesses investors continue to view as capable of delivering durable profits thanks to the ongoing AI boom.

In other words, as long as the growth story surrounding artificial intelligence remains intact, investors appear willing to look beyond higher rates and weaker macroeconomic signals.

One Warning Sign: Semiconductor Stocks

Not everything is perfectly aligned, however.

While the Nasdaq pushed higher, semiconductor stocks lagged during much of the session. That divergence is worth watching, particularly as some observers see echoes of the excesses witnessed during the dot-com era.

This does not mean today’s market is destined to repeat the late-1990s bubble.

But it does highlight an important point: the stronger and more crowded a market trend becomes, the more expectations are already priced into valuations.

That makes the upcoming earnings season particularly important.

Earnings Could Fuel the Next Leg Higher

Third-quarter earnings season will begin accelerating next week.

Current consensus expectations point to approximately 30% earnings growth. That would be slower than the 52% growth recorded in Q2, but still significantly above the expectations seen at the beginning of the year.

Even more importantly, it would mark the third consecutive quarter of earnings growth above 25%.

Technology is expected to lead the way once again, with earnings growth estimated at around 65%, driven largely by semiconductor and semiconductor-equipment companies.

This could be the key test for the market.

AI companies will increasingly need to turn the promise of the technology into real revenue growth, stronger margins and higher earnings.

Meanwhile, Consumer Stocks Remain Under Pressure

Away from technology, consumer stocks continue to face a much tougher environment.

Inflation, higher energy costs, housing affordability issues and weak consumer sentiment are creating significant headwinds.

$Pepsi(PEP)$ is a good example. The stock is down 12% in 2026 and is trading near multi-year lows.

There may nevertheless be a short-term opportunity.

The stock is considered extremely oversold by some market strategists, potentially creating room for a relief rally.

But investors should remain cautious: an oversold stock can stay oversold for a long time, and a technical rebound is never guaranteed.

What Investors Should Watch Now

The current market narrative can be summed up quite simply: AI, earnings growth, strong results, sustained valuations.

If earnings confirm current expectations, the Nasdaq and major technology stocks could continue to attract strong buying interest.

But after such a powerful run, any disappointment in earnings, guidance or AI-related spending could trigger a much sharper reaction given current valuations.

That makes the upcoming earnings season the real test for the rally.

🔥 Conclusion

The market remains firmly in “AI mode”, but the next leg higher will have to be backed by earnings.

Indexes are reaching new highs, growth expectations remain elevated and investors continue to favor companies positioned to benefit from the AI revolution.

But from here, future upside will depend less on promises and more on whether those promises translate into actual numbers.

For now, the trend remains bullish.

But the next earnings season could determine whether Wall Street is truly ready for another leg higher, or whether the market needs to take a breather first.

The AI trade is still alive. Now the numbers have to prove it…

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.

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