This according to Ryan Detrick and Sonu Varghese of Carson Wealth, our two guests on this week’s The Compound and Friends. Ryan is measuring the current bull market from the lows of 2022, which occurred almost four years ago. Since then, we’ve been on an uninterrupted run without a 20% reset. That’s remarkable when you consider how bleak things looked at the end of ‘22.

Of course, one of the important things that happened is that inflation (mostly) fell during this period which allowed the Fed to slightly lower rates and move into an easing bias. There was a tax cut that occurred early in the second Trump administration, we’ll add it to the list as well. But the singular development powering the bulk of our earnings growth and stock price rally has been the dawn of the AI era. The trillion-dollar stock market leaders are almost all playing in the thick of this theme (Eli Lilly excluded) which has ignited a building boom unlike anything we’ve seen outside the mobilization for WWII. It’s also ignited a banking, M&A, new issue, private credit and asset management boom on Wall Street as the race to finance and capitalize on all this activity has gone into hyperdrive. This year will witness the numbers one, two and three largest IPOs in human history and a cornucopia of lesser known but equally lucrative venture capital raises for companies that very well could be next year’s massive initial public offerings.

It’s all happening at once. It’s a classic bull market built on the enthusiasm for a new technological wave that is currently reordering the way we live and work at breakneck speed. The usage growth for Claude and Claude Code, ChatGPT, Google Gemini and other AI platforms is happening on a scale and at a rate we’ve never seen before. It’s been compared to the adoption of electricity at the turn of the last century or the global buildout of the railroads before that. It makes the original internet boom look adorable in comparison. And this time, we’re not talking about pre-revenue businesses tapping the equity markets with little more than a URL and a mascot. We’re talking about businesses charging a lot of money in a total addressable market being measured in the trillions of dollars.

In the period since the launch of ChatGPT on November 30th 2022 until now, the Nasdaq 100 index has gone from 11,630 to 29,440. That’s a 150% gain over three and a half years or an annualized rate of roughly 30%. The market cap of the NDX was $13.5 trillion at the outset and is now closing in on $38 trillion. Nasdaq 100 companies are worth a combined $24 trillion more than they were before OpenAI released its first product. And we don’t even have their stock listed yet, nor do we have Anthropic’s. Both are expected to be worth as much as $1 trillion each upon coming to market.

It’s intuitively difficult to look at what has already occurred over the last three years and believe it’s still early. Almost no one you talk to believes there’s significantly more to come in the current bull run. The recent stock performance of some of the largest publicly traded AI giants - Microsoft, Meta, Oracle, Nvidia, Amazon, Palantir and, yes, now SpaceX - would indicate that the theme powering a $24 trillion dollar wealth creation bonanza is running out of steam. In fact, as Goldman Sachs trading guru Tony Pasquariello points out in his weekend note to The Street, this month was the worst month for the hyperscalers since the Facebook IPO a generation ago. Never before have so many mega-cap stocks looked so bad, all at once.

Tony says “a basket of the core hyperscalers is DOWN 18% so far in June, which tracks as the worst single month for this cohort since the IPO of META. as you can see in the first chart below, the message of the market seems clear: those who are CUTTING the checks are going too far. in turn, this only ups the ante for the hyperscalers to demonstrate an attachment of AI capex to revenue growth in the Q2 reporting period at the end of July (which, selectively, did happen in Q1 earnings).”

I guess we’re going to figure out whether or not the stock market still has an appetite for the “check cutters” of the AI buildout as they continue to announce their ambitious spending plans during this coming July earnings season. Tony points out that those stocks on the receiving end of all this spending (AMD, Dell, Broadcom, Micron, Sandisk, Western Digital, Ciena, Quanta Services, Caterpillar, etc) look like “the photographic negative of the hyperscalers.”

And so the big questions we must answer in the second half go something like this:

How much hyperscaler market cap loss can be tolerated from here before somebody says they’re rethinking all of this capex?

How disastrous of a sentiment shift would this create for the arms dealer stocks we’ve fallen in love with over the last 9 months? Would they get cut in half? Worse?

If Mark Zuckerberg was unwilling (unable?) to endure more than a 70% loss of market cap during the metaverse folly four years ago, why would we expect him to be willing (or able) to endure much more than the current one? Yes, I know AI and the metaverse are worlds apart, but the stock price declines are not. Meta is already in a 30% drawdown from an all-time high set back in August 2025 at $787. Here at $550, its holders have already tolerated a ten-month bear market and the destruction of more than $600 billion in market capitalization. That’s real money. That’s your money and my money. When you announce a plan to spend $145 billion in capex and the market takes away three times that via selling your stock, you probably don’t have an unlimited runway ahead of you, even if you control all the votes (which he does).

And so, we’re in a situation where Wall Street is warning the check cutters to slow down and let the revenue catch up. We’re also getting a warning that there is a limit to the enthusiasm for new issuance of stock given how SpaceX and the chipmaker Cerebras have traded since their blockbuster IPOs this May and June. Both are counting on AI to be the primary driver of their future cash flows. Both are seeing a little bit of Street Justice being applied to their still-generous valuations (I know, I know, it’s early).

But the thing is, these are all very well understood potential challenges for the bull market we’ve been in. The objective observer would probably argue that falling stock prices and valuation gut checks are actually the most supportive factor for a continuing rally. As Palantir falls, Micron rises. As Oracle stumbles, Cisco picks up the slack. As software collapses, semiconductors take over the XLK. This intra-theme rotation has been the way we’ve been able to escape a correction so far and the bulls would argue that rotation is what will keep the plates spinning. Micron is now worth over a trillion dollars and is the ninth largest stock in the world. That happened really fast - much faster than the ascent of Nvidia to the top of the league tables. Micron’s berserker move has made Nvidia’s epic run of a year or two ago look downright boring.

And then there’s the whole premise of AI-driven earnings gains for the S&P 493. After all, aren’t all these other stocks that are not hyperscaling the corporate customers that are proving the value of all this spending in the first place? If they weren’t demanding more compute and more AI then why on earth would the builders and funders of data centers keep going? I happen to like this story a lot. It’s the idea that the next leg of the bull market could be powered by the “real world” businesses that are able to report higher-than-expected earnings thanks to AI-derived efficiencies and productivity. Belief in this story may already be at work in a meaningful way.

On Thursday I said on CNBC’s The Halftime Report that the S&P 493 is up 14% year to date while the Mag 7 (hyperscalers plus Tesla) basket was down 1%. With the S&P 500 up 8% this year, the implication is that the mega-caps are actually net detracting from the performance of the US stock market with the overall market very close to new highs. So perhaps that handoff is already evidence enough that investors like this theme and are willing to bet on it. I’ve pointed to the new highs and rallies in industrials and regional banks as further evidence that the market believes there is a positive externality of all the AI use by ordinary companies.

On June 11th, Sean Russo and I wrote about one such case for our CNBC Pro column on The Best Stocks in the Market. We said “Travelers has been a case study on how implementing AI can expand the bottom line. Management linked a 21% jump in Q4 2025 underwriting income to AI-driven efficiency gains, and in February the company launched an AI Claim Assistant built on OpenAI models to handle auto damage claim calls. Net income grew from $2.7 billion in FY2020 to $6.3 billion in FY2025 — a 133% increase over five years with diluted EPS climbing from $10.52 to $27.43.”

Sure enough, as though on command, Travelers (TRV) broke out to the upside explosively, surging into territory the stock has never seen before. We had the story right but we may have gotten lucky on the timing of our article. Either way, we’ll take it.

(If you’re interested in hearing more about our Best Stocks in the Market and the investment strategy we’ve built based on this research, visit the Porterhouse homepage to inquire.)

Travelers and other stocks like it are the early vanguard of the AI beneficiary trade finally showing up.

If you need a reason to be bullish on the US stock market for the second half, look no further. If we start hearing from dozens of companies that are seeing upside thanks the early AI investments they’ve made, that’s your next leg of the bull right there. And this would allow us to sustain even if the Meta’s of the world either forge ahead with their spending and see continued market cap declines, or, begin to retreat and start talking about a deceleration in building. I wouldn’t say it’s the simplest way for the bull to continue (obviously a mega-cap rally back to the highs would be easier), but it definitely is an option.

We had a great time this week talking about these sorts of market rotations and lots of other topics with our friends Ryan and Sonu. They’re both steadfast bulls on the stock market for the remainder of the year and brought lots of charts and evidence to tell their story. They say it’s too early to stop riding the wave.

I invite you to watch or listen at the links below on an all new The Compound and Friends!

It’s no secret that bullishness about the broadening out trade has carried Wall Street through the first half. In the chart above, my colleague Chart Kid Matt illustrates the contribution of the S&P 493 we talked about above.

The reason the chart says “Your Logo” at the bottom right is because this is one of the graphics that come with a subscription to Matt’s company, Exhibit A. Financial advisors looking for a better way to build investment presentations for their clients and prospects are using Exhibit A to power their meetings, email blasts and other communications.

If you’re a financial advisor and you want to see what these decks would look like with your firm’s colors and logo, right about now would be a great time to go for a test drive.

Tell ‘em Downtown Josh Brown sent you and you’ll get a one on one walk-through with the Chart Kid himself.

Go to Exhibit A here.

THE COMPOUND & FRIENDS

Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Ryan Detrick and Sonu Varghese,⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ of Carson Group, to discuss the biggest questions facing investors right now: the Fed, inflation, market rotation, Micron’s incredible run, semiconductor demand, small caps, gold, Bitcoin, regional banks, and whether the Mag 7 slowdown is actually bullish for the market.