Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / Why Cloudflare and CrowdStrike Are Leading This Bull Market in June 2026
Transcript
- Lucas: So here we are, first week of June 2026, and the bull market is still very much alive — but it's getting weirdly narrow. The S&P 500 is basically flat over the past five days, the NASDAQ is down a hair, but a handful of names are absolutely on fire. Luna: I saw that. CrowdStrike up eleven and a half percent in a week, Cloudflare up over sixteen, Datadog up nearly eleven. And meanwhile the Russell 2000 is down one point six percent. That's a massive divergence. Lucas: Right, and it's not just a one-week fluke. Look at the broader picture: the Fed held rates steady at 3.63 percent in May, the economy is growing at about 1.6 percent real GDP, not gangbusters but not recessionary either. So the macro environment is kind of a Goldilocks — not too hot, not too cold — and that's usually good for risk assets. But the money is clearly rotating into specific pockets. Luna: And it's interesting that it's not the usual suspects. I mean, Nvidia and the AI hardware names were the stars in April and May, but this week it's cybersecurity and cloud infrastructure that are leading. What's driving that shift? Lucas: A couple of things. First, enterprise spending is clearly rotating from hardware to software and services. Companies have been buying all the GPUs they can get their hands on, but now they need to actually secure and manage the AI workloads they're deploying. And that's where CrowdStrike, Cloudflare, Datadog come in. Luna: It's like the 'pickaxes and shovels' trade for the AI gold rush, but the second wave. First you buy the mining equipment, then you buy the safety gear and the logistics. Lucas: Exactly. And there's a specific catalyst this week: Morgan Stanley announced it's opening its trillion-dollar wealth management funnel to AI agents. That's a huge deal. If one of the biggest wealth managers is betting on AI agents for client interaction, then the companies providing the security and infrastructure for those agents become critical. Cloudflare's content delivery network and zero-trust security, CrowdStrike's endpoint protection, Datadog's monitoring — these are table stakes for any AI agent deployment. Luna: That makes sense. And you've also got the headline about Goldman Sachs cutting Hong Kong stocks in favor of mainland China AI hardware plays. So the global money is still flowing into ai related tech, but it's getting pickier. Lucas: Right. But let's zoom in on Cloudflare specifically. It's up 16.6 percent in five days. The company has been positioning itself as the 'connectivity cloud' — basically replacing the traditional corporate network with a global cloud-native platform. And with the shift to AI agents, every business needs low-latency, secure connections between users, data, and models. Cloudflare's network is perfectly suited for that. Luna: Plus they've been pushing their Workers AI platform, which lets developers run machine learning models on the edge. That's a huge growth vector. But is the valuation getting stretched? I mean, Cloudflare trades at a pretty high multiple. Lucas: It does. The price to sales ratio is north of 20, I believe. But the market is pricing in that growth — revenue has been growing 30-plus percent year-over-year, and they're gaining market share. In a bull market, high-growth names command premium multiples. The risk is if growth decelerates or if the macro turns. Luna: And CrowdStrike — up 11.6 percent this week. They reported earnings a couple of weeks ago and the numbers were solid, but the move this week feels like a re-rating. Maybe it's the AI agent security angle? Lucas: I think so. CrowdStrike's Falcon platform is the gold standard for endpoint security, and with AI agents running on endpoints — laptops, servers, IoT devices — you need that level of protection. They also announced a partnership with NVIDIA to bring ai powered threat detection, which ties the story back to the hardware cycle. So you're getting both secular growth and a cyclical tailwind. Luna: And Datadog, up 10.8 percent. They're the monitoring and observability play. If you have thousands of AI agents running, you need to know what they're doing, how they're performing, when they break. Datadog is the dashboard for that. Lucas: Yeah, and they've been expanding into security monitoring and log management, so they're actually competing with some of the same companies they also integrate with. It's a complicated competitive landscape, but the pie is growing fast enough that multiple players can win. Luna: So for investors, the question is: do you chase these names after a big week, or wait for a pullback? And what does this rotation mean for the broader market? Lucas: I think the rotation tells us that the bull market is entering a more mature phase. The easy money — the broad rally where everything goes up — is over. Now it's about stock selection, picking the companies that can actually monetize the trends. Cybersecurity and cloud infrastructure are real, durable trends. But at these valuations, you have to be comfortable with volatility. Luna: And if you're a listener who's been following our conversations, you know we try to give you concrete things to think about, not just hot air. And a couple of dollars a month is genuinely what keeps these conversations going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Lucas: Yeah, it's a small way to keep this ad-free and focused on what matters. And speaking of what matters — let's talk about what this rotation means for the rest of your portfolio. Luna: Sure. So if you're still holding a lot of small caps or value stocks that haven't participated, is it time to cut losses and rotate into these momentum names? Lucas: Not necessarily. The Russell 2000 is down 1.6 percent in a week, but it's still up year-to-date. Small caps have had their moments. The key is to understand why they're lagging. Small caps tend to be more sensitive to interest rates, and with the Fed holding at 3.63 percent, the cost of capital is still high for smaller companies. Plus, many small caps are not ai related, so they don't have that catalyst. Luna: So it's not that small caps are bad, it's that the market is rewarding a specific narrative right now. And that narrative is: AI agents, cybersecurity, cloud infrastructure. Lucas: Exactly. And the danger is getting caught up in the momentum and buying at the top. But if you believe the trend has legs — and I do — then pullbacks are opportunities. The key is to have a thesis and a time horizon. If you're investing for the next three to five years, buying Cloudflare or CrowdStrike after a 10 percent week might still look cheap five years from now. Luna: But you have to be prepared for 30 to 40 percent drawdowns along the way. These are volatile stocks. Lucas: Absolutely. And that's why position sizing matters. You don't want to bet the farm on any one name. Diversification across the theme — maybe own a basket of cybersecurity and cloud names, or an ETF like ICLN or SKYY, though those have different exposures. Luna: What about the broader market? The S&P 500 is at 7,562, basically flat for the week. Is the index capped by the mega-cap tech stocks that have already run so much? Lucas: Partly. The S&P 500 is market-cap weighted, so the biggest stocks — Apple, Microsoft, NVIDIA, Amazon — have an outsized influence. If those names are taking a breather, the index won't go up much. But the breadth of the market is actually improving if you look under the hood. More stocks are trading above their 50-day moving average than a few months ago. So it's not a bad market, it's just a selective one. Luna: And the NASDAQ at 26,834 is also flat, but the NASDAQ-100 is more tech-heavy. So the rotation within tech is masked by the index. Lucas: Right. The NASDAQ is being held up by the mega-caps, but the real action is in the mid-cap growth names. Cloudflare, CrowdStrike, Datadog are all mid-caps. And they're outperforming because they have higher growth rates and more room to run. Luna: One thing I'm watching is the VIX. It's been pretty low, around 13-14. That suggests complacency. If we get a shock — say, a surprise Fed move or a geopolitical event — these high-multiple names could get hit hard. Lucas: That's always the risk. But the Fed seems pretty anchored. The effective fed funds rate is 3.63, and the market is pricing in a cut maybe later this year, but nothing imminent. The economy is growing, inflation is moderating — it's a pretty benign setup for risk assets. Luna: So if I'm an investor with a portfolio, how do I play this? Do I add to these names, or wait for a better entry? Lucas: I'd suggest a phased approach. If you don't have any exposure to cybersecurity or cloud infrastructure, start building a position now, but use limit orders and be patient. If you already have exposure, maybe let your winners run but trim enough to keep your risk in check. The trend is your friend until it isn't. Luna: And keep an eye on earnings. CrowdStrike reports next month, I believe. That could be a catalyst either way. Lucas: Yeah, earnings season is always a reality check. But for now, the market is voting with its dollars, and it's voting for security and infrastructure. That's the story of June 2026 so far. Luna: It's a good reminder that bull markets don't end because of rotation. They end when the economy turns or valuations get absurd. Right now, we're not there yet. Lucas: Exactly. So stay invested, stay diversified, and stay curious. Thanks for listening.