After experiencing the strongest April in six years, Wall Street envisions the "AI bull market narrative" shattering the "May curse".

After experiencing the strongest April in the US stock market in six years, Wall Street institutional investors and leveraged hedge funds are beginning to anticipate the prospects of peace talks between the US and Iran, as well as the so-called "AI bull market narrative" being able to completely overshadow the "May curse" that has long plagued investors. The US stock market saw a significant increase in April, with the two core stock indices recording their strongest monthly performance in nearly six years. With improved corporate earnings prospects and the hype around artificial intelligence investments, market sentiment has significantly improved. Even though the risks of the Middle East conflict and energy supply have not completely dissipated, investors remain optimistic; the S&P 500 index rose 10.4% in April, marking its best single-month performance since November 2020; the Nasdaq rose 15.3%, its largest increase since April 2020. As market expectations for the US-Iran peace talks turned optimistic, and as AI computing power and strong financial reports began to overshadow oil prices and geopolitical risks, Wall Street's anticipation for the US stock market continues to rise after achieving its strongest monthly growth in many years, with this strong upward trend expected to continue into May. As the US opens on Friday, with reports that Iran has delivered its latest response to the US government's proposed peace agreement terms, expectations for a long-term peace agreement between the US and Iran have risen significantly. The three major stock indices on the US stock market opened high, continuing the momentum of the largest single-month increase in many years - in April, profit expansion expectations around AI computing power infrastructure spending overshadowed all risk factors. On the evening that Microsoft, Google, and Amazon, the three cloud computing super giants, released outstanding results on the same night, highlighting the unexpectedly high speed at which their cloud computing businesses are benefiting from the AI wave, leading Wall Street to reassess the commercial returns of AI. A recent report from Morgan Stanley's analyst team projected that the combined capital expenditures of the five mega-scale tech giants (Amazon, Google, Meta, Microsoft, Oracle) could reach about $800 billion in 2026, and is expected to exceed $1.1 trillion in 2027, an increase from the previous forecast of $950 billion. The analysts at Morgan Stanley emphasized that the core logic behind these massive capital investments is: first invest heavily in building capacity, then rely on the scale of commercial revenue and ROIC recovery based on AI computing power resources; the explosive growth in cloud computing backlogs is the most direct evidence that this logic works, with the unexpectedly high speed of the cloud computing businesses of these giants reinventing the pricing of AI commercial returns. In general, these tech giants aim to convince more investors to believe that their massive investments in artificial intelligence will soon yield record returns. Therefore, for the AI computing power supply chain and the global stock market bull market driven by the AI bull market narrative, the increasingly strong AI capital expenditures are indeed a real positive factor that will continue to support the leading players in the AI computing power supply chain and the trajectory of the global stock market bull market driven by the AI bull market narrative. Is AI computing power crushing everything? After the strongest April in six years ignites Wall Street, the May market is facing a "test of endurance." After experiencing the strongest monthly growth in several years, the US stock market is preparing to launch into May; the strong earnings driven by AI computing infrastructure spending will continue to be the main engine. Friday's trading day will mark the end of a week filled with major tech stock earnings and economic data releases. As the market enters May, investors are considering whether this uptrend can continue. Historically, May is usually the beginning of a weaker six-month period for the stock market. According to Fidelity data, from 1945 to April 2026, the S&P 500 index averaged a 2% increase from May to October. In contrast, the average increase from November to April of the following year was about 7%. Although overall corporate earnings are stable, some investors have expressed concerns about the frenzy of AI spending by tech giants. Doubts about the sustainability of some software business models have begun to emerge, prompting some investors who were relatively cautious about the AI computing power investment theme to reassess their portfolios. Peter Vanderlee, portfolio manager at ClearBridge Investments, said, "The disruptive potential of AI in software, services, finance, and other industries has created uncertainty about the endurance and ultimate value of certain business models in the market." Economic data released on Thursday has also intensified market worries, that the current stock buying spree may need to face reality checks. While US economic growth regained momentum in the first quarter, consumer spending, the main engine of economic growth, slowed down, and the personal savings rate declined, indicating that households are tapping into savings to support spending. Moreover, these data only account for the impact of disruptions caused by the Middle East war for one month. With the potential for long-term disruptions in shipping through the Strait of Hormuz, oil prices may become a heavier burden, especially as the consumer support from tax refunds in the first quarter gradually fades. Samuel Tombs, chief US economist at Pantheon Macroeconomics, said, "While GDP expanded at a decent pace in the first quarter, a closer look reveals that the underlying momentum of the US economy has been rather weak even before energy shocks began to show up." Is the "May curse" no longer existent this time? Blindly following the old Wall Street adage "Sell in May and go away" may have consequences for investors. At present, as the market enters a historically more volatile period, investors are weighing whether to put an end to a strong market recovery trend. The S&P 500 index has staged a dramatic rebound; after a sell-off triggered by disruptions in global oil supply, the index recovered nearly 10% of its losses in just 11 trading days. This rapid rebound has led investors to question whether the worst is behind us, or if seasonal storms still lie ahead. According to CFRA data, looking back to 1945, the long-term performance of the S&P 500 index from May to October is flat, with an average increase of 2% - significantly lower than the nearly 7% increase from November to April of the following year. However, the performance during this period over the past decade has been much stronger, with an average increase of 7%, including a 22.1% increase last year. Ryan Detrick, chief market strategist at Carson Group, said, "You really don't want to say 'ignore the 'Sell in May and go away' phrase..... but in the past decade, it simply hasn't worked." Referring to the market performance over the past ten years, he said, "If investors blindly sell in May, move to cash, or even shift to defensive positions, they could seriously hurt themselves." An analysis report shows that since May 2016, if $10,000 had been continuously invested in the S&P 500 index, the funds would have grown to about $34,000, nearly twice as much as the "Sell in May" strategy; the latter would hold cash during the summer. A senior strategist pointed out that there are several factors this year that paint a more optimistic picture for the stock market, indicating that it is not appropriate to overly bearish due to calendar factors alone. With concerns about a large-scale escalation of the US-Iran conflict easing, the stock market has rebounded strongly from a steep sell-off. Strong corporate earnings have supported market sentiment, and the US economy has showed resilience in the face of energy shocks caused by the Iran war. Jim Carroll, portfolio manager at Ballast Rock Private Wealth, said, "If there is a year when you might want to toss seasonal factors out the window, it might be this year." Since May 2016, $10,000 invested in the S&P 500 index would have grown to about $34,000, nearly twice the returns of the "Sell in May" strategy. In addition, a long-term statistical data compiled by CFRA shows that after the market recovers from a pullback of 5.5% to 9.9%, it typically rises by more than 8% in the following three months. With historical data supporting these positive perspectives, and coupled with the new round of AI computing infrastructure spending led by the tech giants exceeding $700 billion, as mentioned above, for the AI computing power supply chain and the global stock market bull market driven by the AI bull market narrative, the continued strong uptrend may be far from over. The common signal released by the latest financial reports of the four major cloud giants is: even though individual company stock prices may differentiate due to ROI, profit margins, or pressure on free cash flow, the overall amount of AI capital expenditures has not cooled down, but continues to rise. For example, Microsoft's financial reports are strong, but not a "flawless AI celebration" investors recognize the ever-increasing demand for AI computing power resources, but are beginning to demand that management demonstrate how the massive AI capital expenditures can be transformed into stronger revenues, overall profit margins, and robust growth in cash flow. However, the Microsoft financial report indeed verifies that the AI computing power demand is still explosively expanding (with $190 billion in additional funding for data center expansion and construction), Azure's growth is approaching 40%, the annual revenue run rate of the AI business exceeds $37 billion, which is also beneficial for the AI GPU/AI ASIC, data center CPU, HBM, and other AI computing power supply chain components. For the AI computing power chain, this is almost a strengthening at the level of "order visibility": GPU/ASIC, HBM/DRAM/NAND, HDD, PCB/CCL/MLCC, optical modules, switches, copper cables, data center power equipment, liquid cooling, data center engineering, and power infrastructure will all benefit. In particular, the bottleneck is not only in GPUs, but has spread to memory, storage, PCBs, networks, and power. The continuous increase in CapEx by the giants implies that upstream hardware suppliers will continue to maintain high pricing power, capacity utilization, and order visibility. Alphabet's cloud revenue grew by 63% year-on-year, with a backlog of cloud orders approaching $462 billion, while Microsoft Azure grew by around 40%, with an annualized revenue run rate for AI business exceeding $37 billion. These data indicate that AI investments are not just about "narratives," but are already being realized in cloud computing-related revenue, enterprise AI demand, and computing power consumption. There is no doubt that the AI CapEx frenzy continues to be the main engine of the bull market, but the market will become increasingly critical of "who can turn investments into actual revenue, profits, and even cash flow." Alphabet rose due to strong cloud growth and high visibility in AI demand; Meta, on the other hand, fell due to an increase in CapEx and uncertainty in investment return cycles, showing that the market is not blindly rewarding burnouts, but is selecting winners with clearer ROI. The conclusion is: regardless of how individual company financial reports react, the common stance of the four major cloud giants of "more investment, less reluctance" is a strong support for the AI computing power supply chain and the global stock market driven by the AI bull market narrative. (Note: This translation may not be perfect due to the technical and financial nature of the text.)