Six weeks, 17% (intraday low-to-high) on the S&P and 11 new records later (“These go to 11”), the old “Markets can stay irrational longer than you can stay solvent” adage is cropping up across the mainstream financial media.

One PM at a London-based firm with $25 billion under management told Bloomberg late this week that the semi rally, or at least as it’s playing out in “some names,” feels “a little bit” like a “casino.”

That’s pretty generous. Assuming he’s talking about the likes of Intel (up six weeks in a row and more than 200% in 2026), AMD (which has doubled already this year and is riding a nine-week streak of gains), Samsung and SK Hynix, the chip rally feels exactly like Vegas.

Like the S&P, the SOX just closed out a sixth weekly advance. It was the eighth week in nine that the semi gauge gained. Three of those nine weekly advances were 10% or more.

The figure above gives you a sense of how extraordinary the semi rally really is. If you round up — i.e., >69.5 = 70 — the SOX has spent 21 consecutive sessions in overbought territory.

It’s tempting to insist on the inherent absurdity of the chip frenzy, but there’s a very compelling fundamental narrative: Chips, it’s said, are “the new oil.”

The US-China cold war is “forcing a global realignment around energy, resources and supply chains,” Nomura’s Charlie McElligott reiterated. “Whoever controls compute and the molecules wins.”

The following headline from Reuters captures the zeitgeist: “SK Hynix flooded with unprecedented offers from big-tech firms to secure chip supplies”. This is about more than semis as poker chips in a casino. It’s about semis as a national security priority amid jostling for 21st century hegemony.

So when people say, as the PM mentioned above did on Friday, that “it’s not rational for these names to be where they are,” it really depends on your lens. And anyway, “markets can remain irrational for some time,” as he went on to remind investors.

Between now and whenever markets come to their senses, it’s not about staying “solvent.” In modernity, it’s rare that people are “ruined” in the stock market in the kind of way investors were wiped out during manias of centuries past.

A modern adaptation of the adage says the market can stay irrational longer than you can stay employed (if you’re in the business of investing other people’s money or pontificating on the outlook for equities) or longer than you can stay sane (if you’re someone who dabbles in market-timing).

As is the case with the chip run-up, there’s a semi-plausible (get it?) case to be made that the fundamentals do justify the broader market rally. For one thing, the “broader” market isn’t especially broad on the cap-weighted benchmarks we all index to (or measure our performance against). So if you think the AI narrative has merit, well then the index rally’s partially justified.

“Our bullish stance on risk assets driven by the strong momentum in the AI theme got further validation lately with strong earnings in Tech and Comms Services,” JPMorgan’s Fabio Bassi said Friday. “The Fear Of Being Obsolete remains a key driver of computational demand for corporates, supporting a solid capex outlook, with further impetus from new Anthropic model[s].”

To parrot my own talking point, bears were fighting both fundamentals and FOMO recently, not to mention a self-fulfilling momentum trade.

As the figure shows, the trend’s been your friend. It’s pretty simple: Stick with what’s working, stay away from what’s not.

Note that the main criticism of mega-cap earnings (that a huge share is attributable to a write-up in the value of Anthropic stakes held by Amazon and Alphabet) implicitly assumes that write-up isn’t justified. I’m not necessarily saying it is, I’m more asking whether it might be.

It’s also worth mentioning that although the S&P’s current weekly win streak certainly feels anomalous, that’s mostly because it’s playing out against the backdrop of a worst-case scenario in the Strait of Hormuz.

As the figure above shows, six-week win streaks aren’t especially unusual. It wouldn’t be unprecedented if the run of weekly advances continued.

Of course, a lot depends on how things develop between Donald Trump and Tehran in the days ahead, but as cavalier as this sounds, stocks really don’t care about the war at this point. It’d take a resumption of full-on hostilities with everything that entails (e.g., the threat of a US land invasion) to override sundry AI narratives.

For years, those inclined to analyzing the intersection of geopolitics and finance (so, people like me) insisted that a total closure of the Strait, even if it only lasted a short time, would be a disaster for the global economy. Certainly, we haven’t experienced the totality of the fallout from the disruption yet, but as is so often the case, it appears the doomsaying was exaggerated.

Given the proximity of his state visit to Beijing, I doubt Trump’s eager to re-escalate. That doesn’t mean he won’t (indeed he sometimes views stock rallies as a green light to dial up geopolitical pressure), it just means he’d rather not meet Xi with the bombs still falling in Iran. Remember: Trump already postponed the China trip once on account of the war.

Finally, it really can’t be emphasized enough that during melt-ups, bears are fighting modern market structure, in most cases without fully understanding what that means.

Although a lot of investors intuitively grasp the concept of negative gamma as it relates to cascading selloffs, they under-appreciate (or fail to realize altogether) that the dynamic cuts both ways.

“Real and synthetic negative gamma creates mechanical flows which contribute to pro-cyclicality, meaning they feed market momentum in the prevailing direction, buying more the higher prices go or selling more the lower prices go,” McElligott wrote Friday. “The reality of negative gamma is that it goes not just down, but up too.”