It has been two months since the conflict with Iran erupted, yet the U.S. stock market continues to breach walls of fear, climbing toward unprecedented historical highs. The driving force behind this remarkable rally is artificial intelligence (AI) technology-related stocks, with semiconductor, data center, and power infrastructure hardware sectors at the forefront. Recent strong earnings from Intel have reignited expectations for a CPU supercycle in the AI era, bolstering overall strength across semiconductors and infrastructure, while NVIDIA has not only reached a new all-time high in half a year but also achieved the miracle of a $5 trillion market capitalization. The Philadelphia Semiconductor Index has set a record with 18 consecutive trading days of gains, proving the market's fervor, and the S&P 500 Index has recorded its largest weekly gain since 2024, maintaining an optimistic outlook.
However, beneath this dazzling rally, underlying anxieties are gradually growing. Progress in negotiations between the U.S. and Iran remains stagnant, and the prolonged closure of the Strait of Hormuz casts a shadow of high energy prices and raw material shortages on the world economy's engine, slowing it down. Behind the simple economic indicator of inflation, energy and food crises are becoming reality, presenting risk signals that could lead to industrial disruptions, consumption slowdowns, and ultimately, a recession—the worst-case scenario. As fatigue and unease from rapid gains spread among investors, the market is likely to become much more sensitive to bad news rather than good news.
Among Wall Street experts, analysis has flooded that short-term upward momentum is weakening. Ed Yardeni of Yardeni Research, who accurately timed the market rebound, emphasized that it is hard to imagine the Strait of Hormuz situation resolving within a few weeks and warned that the market will become volatile. Tony Pasquale of Goldman Sachs also diagnosed that the mechanical buying strength from system funds is reaching its end, stating that the era of "easy money" has concluded. Therefore, the message is not necessarily to prepare for a sharp decline, but to maintain a sober perspective: even with various bad news, whether it will immediately collapse the market is a separate issue.
The major risks threatening the upcoming rally can be summarized in five key points. First, the biggest concern is the heightened downside risk to the global economy due to delays in normalizing the Strait of Hormuz. Shocks are piling up across the entire raw material supply chain, not just oil, but also naphtha, LNG, and fertilizers, leading to reduced operations for Asian and European airlines and a global food security crisis. Goldman Sachs forecasts that even in an optimistic oil price recovery scenario, global crude inventories will fall to historically low levels, and due to logistics bottlenecks and a shortage of tankers, it is unlikely that international oil prices will return to pre-war levels. Second is the concern of inflation driven by rising oil and raw material prices. Many companies have already reported the impact of rising costs in their Q1 earnings, and if this translates into consumer price increases, it could become a major variable affecting central bank interest rate cut decisions. Third is the slowdown in consumption and growth. High energy costs act like taxes, causing guidance downgrades in cyclical sectors such as aviation, transportation, and housing, while vulnerable low-income groups are already feeling the effects of a recession.
The fourth point to watch is changes in technical supply and demand factors. The mechanical buying strength from system strategies like trend-following and volatility control that drove the explosive rebound is weakening. As buy positions reach saturation, a market decline is expected to trigger synchronized selling within the next month. The fifth is the upcoming wave of earnings reports from major tech companies. As the four hyperscalers—Microsoft, Alphabet, Meta, and Amazon—release earnings simultaneously, the market's focus is shifting from AI investment itself to actual profitability. Investors will now scrutinize whether investments are genuinely connecting to revenue growth and cash flow. During such a major technological transition, buying in overbought zones and exiting before earnings reports can become common strategies, and variables such as contract hits in the Middle East market or margin pressure from surging semiconductor prices could lead to guidance disappointments.
Ultimately, the voices calling for "betting on a crash" are not loud, as counterarguments exist for the concerns mentioned above. However, fundamentally, with the economy and market structure currently split in a "K" shape, if the cracks at the bottom are serious, they are a problem. While there is bad news, the growth of the well-performing sectors is too strong to significantly collapse average indices. While low-income groups and companies excluded from AI infrastructure investments continue to face pressure, the upper part of the "K" is becoming even stronger. As the scope of AI benefits widens, the hardware sector reflects unceasing investment enthusiasm, and in the economy, strong consumption by high-income groups creates an optical illusion that masks the cracks at the bottom. There is still a lot of capital waiting in the wings, and because investors have learned to treat previous sharp declines as buying opportunities since last year, they are facing a complex market situation where optimism and fear coexist.