As market expectations grow for a long-term peace agreement between the U.S. and Iran, mediated by Pakistan, optimism on Wall Street has been significantly boosted. The S&P 500 is heading toward its longest weekly winning streak since December 2023. In the view of Wall Street analysts, the super-bull market in U.S. stocks, led by the “Magnificent Seven” and major players in the AI compute power industrial chain, is far from over. Instead, it is transitioning from an “AI valuation narrative” to a more stable phase characterized by “AI profit realization + easing geopolitical risks + broadening profit dispersion across the compute power value chain.”
The so-called “Magnificent Seven” tech giants include Apple (AAPL), Microsoft (MSFT), Google’s parent company Alphabet (GOOG), Tesla (TSLA), Nvidia (NVDA), Amazon (AMZN), and Meta Platforms (META). These companies are the core drivers behind the S&P 500’s repeated record highs and are widely regarded as the portfolio most capable of delivering substantial returns in the AI era.
The construction of AI compute power infrastructure and AI applications are driving robust profit growth among the Magnificent Seven, serving as a major force behind the expansion of overall earnings per share (EPS) for the S&P 500. Analysts at major Wall Street banks such as Morgan Stanley and Nomura believe that the main theme of the global AI super-bull market is escalating from “a single-point explosion in demand for Nvidia’s AI GPUs” to “a sweeping bullish wave across the entire AI compute power infrastructure chain.” Nvidia’s latest earnings clearly show that the AI compute power construction frenzy is far from slowing down and is expanding from AI GPUs to data center CPUs, high-performance networking, HBM memory, server clusters, AI super-factories, and enterprise-level AI cloud computing systems. The average Wall Street price target suggests that Nvidia’s market capitalization could surpass $7 trillion.
The “cake” of the AI bull market is spreading from core GPU assets to the full stack of hardware. While Nvidia remains the pricing anchor, areas such as PCBs, MLCCs, ABF substrates, ODMs, liquid cooling, power supplies, silicon wafers, CMP consumables, photoresists, glass substrates, optical modules, and advanced packaging equipment may all be due for a new round of valuation reassessment.
The Magnificent Seven Ignite the Profit Engine
The S&P 500 is on track for its strongest profit growth in five years. Data shows that about 93% of the index’s constituent companies have reported earnings, with 83% significantly exceeding expectations—the highest level since 2021. Excluding healthcare, profit growth is broad-based. The Magnificent Seven remain the main drivers of profit expansion, with strong performances in the energy and tech sectors offsetting weak consumer confidence. The communication services, consumer discretionary, materials, and industrial sectors have all outperformed expectations. Analysts say that if cyclical sectors and non-AI segments begin to contribute strong growth, while the AI compute power complex continues to generate profits, 2026 could see a repeat of the profit super-boom of 2021.
For the full year, the S&P 500’s gains remain concentrated in the tech sector, but upward revisions in expectations for energy, materials, and technology could drive even stronger performance. The AI compute power theme is the main reason the index’s profit growth may exceed 20% in 2026. Nvidia’s earnings have beaten expectations, with analysts now projecting profit growth of about 84% this year, up from the 64% forecast at the start of the year. The profit growth of the Magnificent Seven will continue to be a key driver of S&P 500 EPS expansion, supported by fundamentals rather than sentiment.
Driven by the impact of the Iran war, earnings expectations for the energy sector have been sharply revised upward to 61% growth. Materials stocks have emerged as a third driver, benefiting from rising prices and tightening supply.
The AI Super-Bull Market Enters a Phase of “Full-Chain Revaluation”
AI compute power investment is shifting from a “single-point compute power race” to a “full-stack compute power system.” The strong cloud computing results reported by Microsoft, Google, and Amazon on the same day have prompted Wall Street to reassess the commercial returns of AI. Morgan Stanley estimates that the five major hyperscale tech giants will have combined capital expenditures of approximately $800 billion in 2026, with the figure expected to exceed $1.1 trillion in 2027.
Nvidia has upgraded from a GPU leader to a “full-stack AI factory infrastructure platform.” According to a Morgan Stanley research report, the increase in the value of the Rubin rack is not driven solely by GPUs; the value of components such as PCBs, MLCCs, ABF substrates, power supplies, and liquid cooling is also rising in tandem. The Rubin VR200 NVL72 rack is priced at approximately $7.8 million, with the value of PCB content increasing by 233% compared to the GB300, MLCC content by 182%, and ABF substrate content by 82%. The AI super-bull market is now entering a second phase characterized by “expanding component content.”
Glass substrates and data center optical interconnects are particularly noteworthy. Glass core substrates are seen as a key candidate for next-generation advanced packaging, with TSMC, Samsung, and others advancing related solutions. Optical interconnect technology is rapidly growing in importance due to the expanding scale of AI clusters.