Has the AI rally gone too far?

The current market rally remains fundamentally supported by robust corporate earnings and a powerful AI-driven capital expenditure cycle, despite localized signs of speculative enthusiasm in semiconductor assets. While the Federal Reserve maintains a "watch and wait" stance, shifting away from forward guidance, the threshold for policy changes remains high, requiring both persistent inflation and labor market surprises. Global economic resilience continues to challenge de-dollarization theories, as US corporate innovation sustains capital flows. Investors should remain cautious of downside risks, particularly regarding energy-related geopolitical instability, and prioritize hedging existing equity positions rather than relying on traditional safe havens. Despite concerns over potential second-half GDP deceleration, the broader economic trend remains upward, driven by sustained demand for defense, energy infrastructure, and supply chain diversification.