27.05.2026 - The $1 Trillion Club
The AI-fueled rally continues to push global equity markets to fresh record highs as more companies enter the exclusive USD1 trillion market capitalization club.
South Korean chipmaker SK Hynix surged above the $1 trillion valuation mark for the first time after a massive rally of around 250% since the beginning of the year. The move reflects the ongoing enthusiasm around AI infrastructure and soaring demand for memory chips.
At the same time, US semiconductor company Micron also crossed the $1 trillion threshold after UBS sharply raised its price target, sending the stock almost 20% higher in a single session.
Markets:
Equities: Semiconductor and AI-related stocks continue to lead global equity markets higher.
Bonds: Bond yields fell back from recent highs - US 10y yield 4.48% - Japan 10y yield 2.70%.
Commodities: with Iran hopes commodity prices fall - oil: WTI USD 89 and Brent USD 96 - gold: USD 4405 and silver USD 74
Currencies: USD broadly stable.
Cryptos: with downside tilt - Bitcoin USD 75K
Volatility: Volatility falls to lower levels around 17
My View: The semiconductor sector remains at the center of the current market euphoria. To me, it increasingly feels as if investors view chips as the “new gold” of the AI revolution. The race to scale AI infrastructure continues at full speed, supporting tech-heavy equity indices around the world.
At the same time, market breadth is deteriorating noticeably, as only a smaller group of companies continues to drive the rally higher. Historically, this is usually not a healthy sign for the broader market. More and more capital is flowing into just a handful of names, creating increasingly parabolic price movements.
The narrative currently seems simple: chip shortages, exploding AI demand, and enormous pricing power create the impression that semiconductor companies can only continue moving higher.
However, there is another side to this story.
The higher chip prices rise, the more expensive the entire AI infrastructure buildout becomes. Data centers, AI hardware, energy supply, and financing costs are all increasing simultaneously. Rising capital costs simply add another layer of pressure to future profitability.
I do not believe this development is sustainable across the entire AI industry.
Technology cycles move extremely fast. What appears to be cutting-edge infrastructure today can become obsolete surprisingly quickly. This increases the risk of future write-downs, falling margins, and eventually weaker earnings.
At current valuation levels, markets are increasingly pricing in perfection, or perhaps even over-perfection.
I cannot predict the exact timing of when this cycle will reverse. But history shows that parabolic moves in financial markets rarely end gradually. Once momentum shifts, stock prices often fall at the same speed they previously moved higher, or even faster.
Therefore: fasten your seatbelts.
Disclosure: Short position in Semiconductors, Micron, KOSPI Index
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