Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / Why Nvidia and AI Hardware Stocks Dominate the June 2026 Bull Market
Transcript
- Lucas: The NASDAQ crossed 27,000 for the first time last week, and a big chunk of that move is coming from one corner of the market — AI hardware. Luna: We're talking Nvidia, Arm, maybe some of the data center plays too? Lucas: Exactly. Nvidia is up about 18 percent in the last five days alone. Arm is also surging. And the broader growth ETF — IWF — is up 2.3 percent over the same period, which is nearly double the S&P 500's gain. Luna: That's interesting because I think a lot of people still think of AI as this speculative software play. But the hardware side is actually where the revenue is right now. Lucas: And if this conversation has helped you think about the market a little differently, the way we keep this show ad-free is through listener support. You can find us at buy me a coffee dot com slash fexingo. It's a small gesture that goes a long way. Luna: Yeah, absolutely. It keeps us independent and focused on the numbers. So back to that hardware rally — what's driving it this week specifically? Lucas: Part of it is the Fed holding rates steady at 3.64 percent. That gives growth stocks a bit of a tailwind. But the bigger story is that earnings from these companies have been beating expectations. Nvidia's data center revenue is up something like 70 percent year-over-year, and Arm's licensing revenue is accelerating. Luna: So it's not just hype — there's actual revenue growth to back it up. But do you worry that it's getting overconcentrated? I mean, the NASDAQ is heavily weighted toward a handful of names. Lucas: That is the risk. When you look at the NASDAQ's 1.6 percent gain this week versus the S&P's 1 percent, a lot of that outperformance is coming from just three or four stocks. If any of them stumble, the index could take a hit. Luna: But the momentum is undeniable. The Russell 2000, on the other hand, is actually down 0.8 percent this week. So it's really a large-cap, tech-led rally. Lucas: Right. And that's a pattern we've seen before — in 2023 and 2024. But what's different now is that the 'picks and shovels' thesis is more concrete. Companies like Nvidia and Arm are selling the infrastructure that everyone else needs to build AI. It's not just a narrative anymore. Luna: What about some of the software names that were hot earlier in the year? Like Shopify, CrowdStrike, Cloudflare — they've also been rallying, but is that part of the same trend? Lucas: Partially. Shopify is up 17.6 percent in five days, and CrowdStrike is up 14.6 percent. But those are more about their own earnings beats and cybersecurity demand. The hardware story is more unified — it's all about AI compute. Luna: So if I'm an investor looking at this, how do I think about valuation? Nvidia's price to earnings ratio is still elevated, even after the rally. Lucas: It is. Nvidia's trailing P/E is above 60. But the growth rate is also extraordinary. If you look at forward earnings, it's more like 35. Still not cheap, but not insane if the growth continues. Luna: And the broader economic picture seems supportive. GDP growth picked up to 1.6 percent annualized in the first quarter, up from 0.5 percent. That helps justify some of the optimism. Lucas: It does. But I'd caution against assuming this rally is broad-based. The Dow is up only 0.9 percent this week, and the NYSE composite is flat. So if you're not in tech or AI hardware, you're not really participating. Luna: That's a classic two-speed market. Do you think it's sustainable, or do we eventually see a rotation into other sectors? Lucas: I think a rotation is likely at some point. Historically, when one group gets this stretched, money starts looking for value elsewhere. But timing it is impossible. For now, the momentum is clearly with AI hardware. Luna: So the takeaway might be: enjoy the ride, but keep an eye on concentration risk. Lucas: Exactly. And if you're looking for exposure, there are ETFs that focus specifically on semiconductors or AI infrastructure, which can give you diversification within the theme. Luna: I think that's a good note to end on. The rally is real, but it's narrow. And the fundamentals are strong for the leaders, but valuations matter over the long term. Lucas: Well said. Thanks for listening, and we'll be back tomorrow with another angle on this market.