Opportunities in Markets and Technology Amidst Global Rally?

Global markets, particularly technology stocks, are defying current uncertainties, including ongoing conflicts in the Middle East and Ukraine, trade tensions, and persistent energy crises, by reaching new record highs. The MSCI Emerging Markets index, heavily influenced by technology, has seen a remarkable surge of approximately 25% since January.

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The current context remains one of the most uncertain in recent years: ongoing conflicts in the Middle East and Ukraine, rising trade tensions via tariffs, and a persistent energy crisis.

Market participants are not ignoring the risks; segments most sensitive to geopolitical and energy shocks have experienced notable corrections. However, the primary driver behind the year's rally is an acceleration in corporate profits. Profit expectations for 2026 have been revised upward significantly: by about 29% for the MSCI Emerging Markets and 7% for the S&P 500 since January. This profit growth is largely concentrated in the technology sector, accounting for nearly 90% of the S&P 500's performance this year.

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The main driver of the rally since the beginning of the year is the acceleration of profits.

While the adoption of Artificial Intelligence (AI) is progressing, with over half of companies now subscribed, the market awaits concrete demand evidence before rewarding new investments. Investors are currently favoring immediate beneficiaries of the capital expenditure boom, such as semiconductor manufacturers, memory and electronic component suppliers, and data center construction firms. The semiconductor sector, for instance, has seen approximately 90% growth (SOX index) since the start of the year, far outpacing hyperscalers.

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The market's progress remains highly concentrated in technology, which accounts for nearly 90% of the S&P 500's performance this year.

Opportunities are expanding beyond the dominant U.S. and Chinese markets. A significant portion of AI capital spending is benefiting Asian suppliers, particularly in South Korea and Taiwan. These companies offer attractive valuations despite strong performance since January. The increasing diversification within the tech sector signals a return to more discerning investment strategies, benefiting active management and the search for alpha.

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Investors are currently favoring the immediate beneficiaries of the Capex boom: semiconductor manufacturers, memory and electronic component suppliers, but also data center construction players.