Space X-Rated

But underneath that, performance has been incredibly narrow, driven by a handful of semiconductor names that have just kept pushing higher and higher until we finally saw a bit of a wobble last Friday.

with the Nasdaq falling over 4%, its worst day since Liberation Day back in April last year.

This was a combination of two things hitting at the same time.

Broadcom's results came out, and while the numbers were fine, the market was expecting an upgrade to their guidance for AI semiconductor revenue.

And when that didn't happen, the stock fell and set off a broader sell-off across the sector.

Then on top of that, we had a hotter-than-expected jobs report in the US, which shifted the conversation back towards whether we might get rate hikes this year.

Markets have been fairly volatile since, and it raises the question of, is this the beginning of the end of the momentum rally? Will, what are your thoughts on this one?

So, yeah, it's been an incredible market, really, over the last couple of months or so, almost to the extent this year, but particularly, I'd say...

since the war started, or at least since the ceasefire came into play.

You've had this environment where, and we've seen it over the last few years, we've seen markets very concentrated, but that's almost been on steroids this year, where the S&P, I think, is up 10%.

And 75% of that returns come from eight stocks, four of which are the more traditional type names that we know and love, your Apples, your Amazons of this world.

And the rest are, as you say, made up predominantly of those semiconductor names.

So I thought it might just be worth sort of explaining what is going on and where the excitement has come from.

And we did touch on this a little bit in our last podcast when we talked about those memory names and what's happening in South Korea, et cetera.

But just as sort of reminder, I guess, for listeners, that essentially we're all wary of what's happening with artificial intelligence and the rollout of the infrastructure.

And you've got a handful of these big companies that are essentially looking to build out the AI infrastructure for the world on which AI is going to run with the expectation that we are all going to start using AI more and more throughout all of our lives.

And to be fair, that is already happening.

I was on a call with Microsoft earlier this week, and they are literally saying that they cannot build quickly enough.

Essentially, they'd sell more if they had it available because there is massive demand for AI increasingly.

And you can see it.

We're all using it more and more in our day-to-day lives, whether you're a ChatGPT subscriber, whether you're just using it through Gemini, whether you're at work and you have Copilot.

And when we've been out talking to company management, they're all falling over themselves to say how much they're rolling Copilot out to every single person.

And Microsoft made that point.

It was a call with Jefferies and they said that Jefferies have rolled out to all 7,000 people in their firm.

I think Accenture have rolled out something like 750,000 people in their business.