Wall Street looks forward to the "AI super bull market" sequel! From the strongest profit in the S&P in five years to Rubin's grand vision, AI computing power beyond GPU is skyrocketing.

With the market looking forward to a long-term peace agreement between the United States and Iran under the mediation of Pakistan - transforming the previously fragile ceasefire agreement into a lasting peace agreement, this increasingly positive outlook has boosted Wall Street's optimism and pushed the S&P 500 index, one of the benchmark stock indices in the US, to its longest weekly winning streak since December 2023. According to Wall Street analysts, the tech giants known as the Magnificent Seven (or Mag 7) and other giants in the AI computing industry are leading the way in the US stock super bull market, which is not over yet but transitioning from the "AI valuation narrative" to "AI profitability realization + geopolitical risk mitigation + profitability breadth expansion of the computing power value chain" in a more stable phase. The so-called "Magnificent Seven" include Apple, Microsoft, Google's parent company Alphabet, Tesla, Nvidia, Amazon, and Facebook's parent company Meta Platforms. They are seen as the core driving force behind the record highs of the S&P 500 index and are considered by top Wall Street investment firms as a combination capable of bringing huge returns to investors in the biggest technological revolution since the internet era. Analysts believe that the wave of AI computing power infrastructure construction and the strong profit growth driven by the Magnificent Seven in the AI applications will be a crucial force for expanding the overall EPS indicator of the S&P 500 index in the long term. In addition, senior market analysts at Morgan Stanley and Nomura believe that the main theme of the global AI super bull market, including US stocks, is shifting from "Nvidia's AI GPU demand surge" to "bullish wave across the entire AI computing power infrastructure chain," which will continue to support the US and global stock markets around the super bull market in AI. The most typical example undoubtedly lies with Nvidia, as its latest performance clearly highlights the ongoing surge in global AI computing power infrastructure construction, extending from AI GPU/AI ASIC to data center CPU, high-performance network infrastructure, enterprise-level HBM/DRAM/NAND storage, integrated server clusters, AI super factories, and large-scale AI cloud computing systems. Analysts on Wall Street are increasingly bullish on Nvidia, with the average target price suggesting a market capitalization potential exceeding $7 trillion. Therefore, the "cake" of the AI bull market is spreading from core GPU assets to the full-stack hardware bottleneck. While Nvidia continues to set the tone for the AI bull market, other components such as PCB, MLCC, ABF, ODM, liquid cooling, power supply, silicon wafers, CMP consumables, photoresists, glass substrates, SOI/InP, data center optical interconnect equipment, optical modules, and advanced packaging equipment could undergo revaluation. After bouncing back by 18% from the low point triggered by the Iran war, the S&P 500 index closed on Friday with a high likelihood of achieving an eight-week winning streak - the longest since December 2023. However, the yield on the two-year US Treasury bonds has risen, with Fed Governor Christopher Waller stating that the possibility of the next Fed monetary policy rate action being a raise or a cut is equally likely. The currency market has fully priced in a hawkish expectation of a rate hike by the end of 2026. However, the US crude oil price has experienced drastic fluctuations, as traders try to determine when the energy flow through the Strait of Hormuz will fully recover. After nearly three months of the outbreak of a new round of Middle East geopolitical conflict, Tehran is considering the latest proposal submitted by the US. Pakistan has announced that its army chief is heading to the Iranian capital, indicating positive progress in the peace negotiations to end the war. Media reports suggest that a Qatari negotiating team has arrived in Tehran, coordinated with the US, to facilitate a long-term ceasefire agreement. US Secretary of State Marco Rubio stated that there has been "some positive progress" in the negotiations with Iran, but "we are not there yet." The United Arab Emirates has been actively pushing for an end to the war, insisting on peace talks between the US and Iran, in partnership with Saudi Arabia and Qatar, instead of starting a new round of conflict. According to senior analyst Craig Johnson at Piper Sandler, investors are actually overlooking macro headwinds and giving positive pricing and feedback on the peace prospects, a trend that has been providing tailwinds for the stock market. He said, "The global stock market is showing a 'hope-driven' rebound." Mag 7 Ignites Profit Engine! US Stocks Set to Achieve Longest Weekly Winning Streak Since End of 2023 As the bull market momentum shifts from AI computing power infrastructure-driven gains to the vast majority of the tech sectors in the US corporate sector, the S&P 500 index is poised to achieve its strongest profit growth cycle in five years. The latest statistics from Bloomberg Intelligence show that out of the companies in this benchmark index, around 93% have reported their earnings, with 83% of the constituent companies significantly exceeding analyst expectations. This is the highest level since 2021. Apart from healthcare, profit growth has a broad foundation. Overall, the Mag 7 remains the main driver of profit expansion in the S&P 500 index, but the strong performance of the entire energy and technology sectors overshadows the weak consumer confidence related to the rise in oil prices due to the Iran war. Data compiled by Bloomberg Intelligence shows that the communication services and non-essential consumer goods sectors have delivered the biggest positive surprises, with the materials and industrial sectors also exceeding expectations. Senior analysts Nathaniel Welnhofer and Christopher Cain at Bloomberg Intelligence stated, "If cyclical sectors and non-AI sectors begin to contribute strong growth, while Nvidia and those comprehensive AI computing power infrastructure continue to generate profits, 2026 might not look like a late-stage slowdown after a bull market cycle, but more like a repeat of the super profit boom after the global Covid-19 pandemic in 2021." Overall, it is expected that the profit growth of the S&P 500 index will continue to be concentrated in a few sectors revolving around tech stocks, and the upward revisions in the energy, materials, and tech sectors' profit expectations are likely to drive the index to stronger performance. As shown above, profit growth expectations for the S&P 500 index have been continuously raised throughout the year - with the energy, technology, and materials sectors leading the overall earnings per share (EPS) growth trajectory of the index in 2026. Note: Data as of May 15th. Bloomberg Intelligence states that much of the profit growth in the S&P 500 index still comes from large tech companies like the Mag7, and the AI computing power theme is seen as a major reason why the index's profit growth in 2026 could exceed 20%. This index, which has about 40% weight from tech giants like Nvidia, Apple, and Microsoft, saw a significant upward revision in its position and EPS by analysts after the first quarter, with over 90% of the constituent companies surpassing earnings expectations for four consecutive quarters. Nvidia's performance and outlook have exceeded the consensus expectations on Wall Street, prompting analysts to further raise profit forecasts. The adjusted earnings of this global market leader - analysts currently estimate a growth of about 84% this year, higher than the 64% forecasted at the beginning of the year. According to Citigroup, after Nvidia's management suggested that sales could exceed $1 trillion by 2027 without including contributions from new revenue sources like the Groq LPX system and Vera processor, the full-year profit expectations for the company have been raised. As shown in the chart above, Nvidia's adjusted profit forecast for the 2027 fiscal year has been raised. Note: Data as of May 22nd. According to Tajinder Dhillon, head of LSEG profit research, the profit growth of the Magnificent Seven will continue to be a significant force driving the overall EPS trajectory of the S&P 500 index, with expectations that they might stabilize on a growth trajectory by entering 2027, although this investment portfolio is expected to significantly outperform the broader S&P 500 index. The quarterly profit growth forecasts divided by portfolio are shown in the following chart - indicating the significant impact of the strong profit growth of the Magnificent Seven on the fundamental earnings of the US stocks. This latest trend further reinforces the core view of bullish investors, that the market will continue to focus on the mega-cap tech giants, supported by fundamentals instead of teetering on the edge of an "AI bubble" burst, driven by over-excitement. Additionally, due to the impact of the Iran war, the energy sector of US stocks has seen the largest upward revision, with analysts now predicting a 61% increase in profits for this year, higher than the 7.6% forecasted earlier this year. ExxonMobil and Chevron both reported stronger-than-expected first-quarter earnings, mainly due to higher oil and gas prices compensating for production disruptions related to the war. Together with ConocoPhillips, they are the main growth drivers of this sector, accounting for about half of its sub-index weight. Analyst Brandon Bingham at Wells Fargo stated in a report that energy companies are generally optimistic about next year, citing reasons such as a strong backlog of projects, stable growth, and further development prospects. Material stocks have become the third driving force of the index, benefiting from rising prices and tightening supplies. Patrick Cunningham, an analyst at Citigroup, noted that disruptions in the Middle East had limited impact, only causing cost inflation, and pointed out that demand trends appear stable, offering a cautious but constructive outlook for businesses. Cunningham mentioned that coatings manufacturers like Sherwin-Williams Co., PPG Industries Inc., and Axalta Coating Systems Ltd. expect cost inflation, although they still anticipate moderate sales growth in the second half of the year. The chemical giant Dow Inc. remains conservative but may tilt upward if prices improve further. Bloomberg Intelligence suggests that industrial gas producers like Air Products and Chemicals Inc. and Linde Plc may benefit as the global helium market tightens following a shutdown at a factory in Qatar in March that took about one-third of the supply offline. The AI super bull market is entering a "full-chain reassessment" moment: from Vera Rubin racks to glass substrates, GPUs no longer dominate the computing power theme! The AI computing power value chain beyond GPUs is taking off Amid the global proliferation of AI smart agents, the investment theme of AI computing power is shifting from the "race around AI GPU singular computing power" to the "full-stack computing power system driven by AI smart agents." The next round of alpha excess profits will no longer be exclusive to the domain of the strongest players in GPU or ASIC areas, but will systematically spread across data center CPUs, DRAM/NAND/HBM storage, AI PCBs, liquid cooling systems, data center optical interconnect systems, ABF boards/glass substrates, and a broad range of semiconductor foundries in the full-stack AI computing power infrastructure layer. On April 30th, the three cloud computing super giants of Microsoft, Google, and Amazon all delivered impressive performance reports in a single night, highlighting the unexpectedly explosive growth in their cloud computing businesses benefiting from the AI wave. A new report from Morgan Stanley's analyst team projects that the combined capital expenditures of the five mega-scale tech giants (Amazon, Google, Meta, Microsoft, Oracle) will be around $800 billion in 2026, potentially surpassing $1.1 trillion in 2027, further raising from the previously forecasted $950 billion. The analysts at Morgan Stanley emphasize that behind these massive capital investments lies the core logic of first reinvestment, capacity building, followed by the commercial revenue and ROIC recovery based on AI computing power resources; the surge in cloud computing backlogs and AI application tokens is the most direct evidence that this logic works. The unexpectedly rapid growth of these tech giants' cloud computing businesses in response to the AI wave has led Wall Street to reassess the commercial returns of AI and the increasingly positive sentiment towards investments in the entire AI computing power infrastructure chain. Wall Street's mainstream target prices for Nvidia have already positioned the company as a $7 trillion-level corporation; the most aggressive aggregated target prices have pushed it towards a $12 trillion level; and the core logic behind these high target prices is the transformation of Nvidia from the GPU leader to an "AI factory full-stack infrastructure platform" - jointly supported by GPUs, CPUs, networks, rack-level systems, software ecosystems, and capital returns, with expectations that AI accelerated computing infrastructure spending could reach $3 trillion to $4 trillion by 2030. Therefore, the main theme of the AI super bull market is shifting from the "Nvidia GPU surge" to the "reassessment of the full AI infrastructure chain." In the previous stage, the market mainly focused on buying GPUs, HBM, cloud capital expenditures, and Nvidia's earnings resilience; however, the Morgan Stanley research report shows that Rubin BOM teardown tells investors that the next-generation AI rack value is not driven solely by GPUs, but every component in the chain, including PCB, MLCC, ABF boards, power supplies, liquid cooling, ODM assembly testing, is collectively lifting the content value. Morgan Stanley's calculations indicate that the price of the Rubin VR200 NVL72 rack is around $7.8 million, almost twice the price of about $3.99 million for the GB300; in this, the content value of the PCB increased by 233%, MLCC by 182%, ABF by 82%. This means that the AI super bull market is entering the second stage of "component content expansion." From an engineering perspective, Rubin is not just a GPU replacement, but a leap in rack-level system complexity. When NVLink/NVSwitch, ConnectX, BlueField DPU, mid-plates, switch trays, SOCAMM/high-bandwidth memory, and liquid-cooled power supplies all enter the same rack, the value chain naturally spreads from GPU chips to high-speed copper connections, data center optical interconnect systems, power supply, cooling, substrates, and high-layer PCBs. The percentage of GPUs in the BOM has actually decreased from about 65% for GB200 to about 51% for VR200, but the absolute amount for GPUs has increased from about $2.52 million to about $3.96 million; this is the most critical change in the AI industry chain: the leader remains strong, but the "supporting links" are being revalued as indispensable performance bottlenecks. Wild research reports reveal the structural changes in the deeper levels of AI data center: AI is pushing the semiconductor growth logic away from "process miniaturization" towards "structural innovation + material replacement + advanced packaging + optical interconnect." While the capital market used to focus on advanced nodes at TSMC, Nvidia GPUs, and ASML lithography machines; entering the 2nm, 1.4nm, and post-Moore era, backplane power, GAA/cFET, SoIC hybrid bonding, wafer-level bonded NAND, glass-core substrates, photonic SOI, MO photoresists, InP/integrated circuit internal I/O silicon photonics, etc., are starting to become critical variables determining the efficiency, bandwidth, yield, and cost of AI chips. These developments explain why the "AI super bull market" has not ended with the rise in Mag7 valuations, but is transitioning from a narrative of valuation to a realization of profits and the breadth expansion of the supply chain. Nvidia, Microsoft, Google, Meta, Amazon continue to expand AI Capex, bringing systemic demand for AI server racks, advanced packaging, HBM, PCBs, MLCCs, ABF, optical modules, liquid cooling, power supplies, and data center power chains. Unlike 2023-2024, the market is no longer just betting on "who has the strongest model/strongest GPU," but instead, it is re-examining every bottleneck of AI infrastructure, including issues such as power density, interconnect bandwidth, packaging yield, and supply constraints. Glass substrates and data center optical interconnects are particularly worth watching. As AI chip packaging sizes grow ever larger, with more I/Os, and higher signal rates, traditional organic ABF substrates and first-gen silicon interposers face pressure in terms of warpage, thermal expansion, signal loss, and large-area planarity, making glass core substrates an important candidate for the next generation of advanced packaging. TrendForce indicates that TSMC, Samsung, Rapidus, among others, are advancing glass interposer/board solutions, and SK Absolics aims to achieve glass substrate mass production by 2026; IDTechEx points out that the demands of AI/HPC are forcing the packaging stack to carry higher currents, more I/Os, and higher signal rates, leading glass-core substrates from niche technology to commercialization. Optical interconnects are an inevitability as AI data centers transition from "computing power stacking" to "network bottlenecks." After training and inference clusters almost infinitely expanded, the data flow between GPUs, racks, and data centers increased significantly, with electrical interconnects facing limitations in distance, power consumption, and bandwidth density; optical interconnect technologies (primarily including co-packaged optics, silicon photonics switches, optoelectronic circuit switches) and more advanced silicon photonics-level optical I/O technologies can use light signals instead of electrical signals, significantly increasing density and efficiency, reducing latency and power consumption, that is the demand for higher optical interconnect capacity is common for both GPU and TPU clusters. In other words, the next stage of the AI super bull market is not just about faster chips, but about chips, advanced packaging systems, network infrastructure, optical interconnect systems, materials, liquid cooling, PCBs, MLCCs, ABF boards/glass substrates, rack-level computing clusters, and power systems collectively determining the "AI factory economics" launched by Nvidia CEO Jen-Hsun Huang.