From Middle East Tensions to Market Euphoria: Why AI Stocks Keep Winning VIEW IN BROWSER 
For weeks, investors were ready to brace themselves. Looming in the background were a regional war in the Middle East, a hawkish Federal Reserve, a wobbly U.S. economy, and the threat of a global downturn. But instead… Stocks are soaring. Oil prices are falling. Rate-cut odds are rising, with the market now pricing in two rate cuts by year‑end. And tech – especially anything tied to AI – is ripping higher. The Nasdaq is leading this week’s gains, as chipmakers like Nvidia (NVDA), AMD (AMD), and Broadcom (AVGO) are up ~2- to 6%. Indeed, what was forecasted as a nasty market storm has turned into a rally… because geopolitical tensions that once threatened to spiral – particularly in the Middle East – have eased. Cease-fire talks between Israel and Iran are holding, and energy markets are stabilizing. That sudden relief has unleashed a wave of risk-on sentiment across global markets. And we have a sneaking suspicion that it’s just a preview of what’s coming next; a full-blown market melt-up led by the unstoppable AI Boom. Here’s why. Why the Market Shrugged Off War and Rallied Instead This past weekend, the U.S. struck three Iranian nuclear facilities at Fordow, Natanz, and Isfahan. It was a stunning escalation in the conflict between Israel and Iran – a move that, just a few years ago, would’ve sparked oil over $100 and sent stocks plummeting 5% in a day. But thankfully, that didn’t happen. In fact, oil prices fell, and the stock market rallied. Why? Because savvy investors knew what was likely coming next… Iran responded with a small, highly telegraphed missile strike against a nearby U.S. airbase that was essentially empty. All the missiles were intercepted. There were no injuries or fatalities, and fallout was minimal. In our view, it was a ‘symbolic’ retaliation. It allows Iran to say it at least did something in response to the U.S.’ affront. But it also allows the U.S. to say that this counterstrike was so minimal that it really isn’t worth a response. And now? The U.S. says it’s done. President Trump declared the conflict over. And so far, the cease-fire is holding. There is no further U.S. military escalation, no World War III. Markets love clarity – and that’s exactly what we have now. It seems this Middle East flare-up will not derail the bull market. It’s noise; and it’s already fading. Strong Growth + Soft Inflation = Perfect Backdrop for AI Stocks Meanwhile, back home, the U.S. economy continues to hum along surprisingly well. June’s PMI numbers came in better than expected. Composite PMI eased just slightly to 52.8 (from 53.0), still firmly in expansion territory. Manufacturing held at 52.0 – its 15‑month high – while services slipped only to 53.1. Clearly, overall business activity is still growing. Yes, consumer sentiment has been weak. In June, the Conference Board’s Consumer Confidence Index fell from 98.4 to 93.0, driven largely by concerns around tariffs and jobs rather than immediate spending pullback. But most likely, that dip had more to do with residual anxiety over global headlines than structural weakness. Consumers are still opening their wallets. Core retail sales rose 3.3 % year-over-year in May, even though overall sales dipped 0.9 % month-over-month . Meanwhile, the job market remains resilient: May added 139,000 nonfarm payrolls, just above expectations, with average growth running ~144,000 per month over the last year. And inflation is still cooling. Oil prices have plunged following the Israel‑Iran ceasefire, with crude dropping from over $77 to about $65 per barrel, helping to ease headline inflation pressures at the pump. It feels like we’re in the “Goldilocks” zone investors love: growth that’s just strong enough to support earnings and just soft enough to unlock Fed rate cuts. And speaking of the Fed… The Fed Pivot Is Here – and That's Bullish for AI For the last few months, the bears have insisted that the Federal Reserve would stay on the sidelines – perhaps even hike rates again – due to sticky inflation, tariff risks, and spiking oil prices. But that narrative is unraveling fast. Over the last week, three Fed officials – including Board Chair Jerome Powell – have floated the possibility of cutting rates as early as July. Odds of a July cut, which were just 5% last week, are now more than 25% and climbing. The market is now pricing in four to five cuts over the next 12 months. That’s a complete pivot… and a critical catalyst. Rate cuts mean lower borrowing costs, a stronger housing market, multiple expansion, rising valuations, and a jolt of stimulus just as investor sentiment is starting to turn optimistic again. This is exactly the fuel the bull market needed. And the spark? Still-booming AI. 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AI Is Going Live in the Real World Even with the threat of a new war on our doorstep, the AI Boom just kept marching forward, unfazed and unrelenting. The day after the U.S.’ attacks in Iran, Tesla (TSLA) officially launched its Robotaxi service in Austin. Uber (UBER) followed by debuting autonomous rides in Atlanta with Waymo, just days after Waymo announced expansion into New York City. Real-world AI infrastructure is going live across America right now. But it doesn’t stop at self-driving… Salesforce (CRM) launched its Agentforce 3 platform to meet surging demand for AI agents. Goldman Sachs (GS) rolled out an AI assistant to 10,000 employees across the firm. And Google unveiled new on-device AI for Lenovo’s Chromebook line. At work, at home, in your car, in your browser, the AI proliferation continues full-steam ahead. And investors are taking notice. AI stocks are blasting higher. Our proprietary AI Builders 15 index spiked about 4% yesterday – quadruple the S&P 500’s gain. Names like Uber, Mobileye (MBLY), Nvidia, Marvell (MRVL), Reddit (RDDT), and Celestica (CLS) ripped higher. Meanwhile, legacy stocks like Coca-Cola (KO) and Home Depot (HD) crawled sideways. Costco (COST) dropped. That’s the divergence. This stock market is rewarding the future, not the past. How to Position for the Brewing Market Melt-Up Let’s look at the full picture here. We now have a deescalating geopolitical backdrop, an economy that’s holding up better than expected, and a Federal Reserve that’s inching closer to easing policy. Add to that the unstoppable force of the AI megatrend, and it’s clear that powerful tailwinds remain in place. Of course, that doesn’t mean it’ll be a smooth ride. Volatility is still a risk. Energy shocks, policy surprises, or new flare-ups abroad could rattle sentiment. But even with those potential near-term bumps, it appears the broader direction of this market is tilted higher… especially in the sectors driving real innovation. We continue to believe that the S&P could push toward 6,500 in the coming months, that AI leaders could double, even triple, from here; and that this cycle will reward vision, execution, and bold positioning. So, here’s the key to winning in today’s market: you can’t just own any stock. You need to own the right stocks: the disruptors, the builders, the enablers – the future-makers. Right now, the smart money is quietly accumulating positions in what could be the next trillion-dollar breakthrough. While everyone else chases the obvious AI plays, a handful of under-the-radar companies are solving the industry's biggest bottleneck – one that's kept revolutionary technology locked away in labs for decades. In fact, it’s what the late, great, Steve Jobs saw as his ‘Final Vision.’ Now the solution is finally here. And we think the stocks at the epicenter of this niche could become 10X winners. Sincerely, 
Luke Lango
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