A Broad Approach in a Narrow Market

• High-bandwidth memory suppliers (Micron, Samsung, SK Hynix) doubled prices and saw combined profits surge 963% to $96 billion in one quarter, consuming a large portion of the estimated $765 billion in U.S. AI investment for 2026
• Semiconductor sector volatility reached 'fever pitch' with multi-percentage-point daily swings near all-time highs, a pattern historically similar only to the final run-up of the tech bubble in 1999-2000
• AIM's Growth, Moderate, and Conservative strategies all outperformed their benchmarks year-to-date while maintaining above-neutral equity exposure but avoiding concentrated AI positions, benefiting instead from Japan, Biotech, and energy diversification

Market Summary: Q2 2026 - Narrow AI Rally Dominates Amid Elevated Risk

Key Market Developments

Q2 2026 saw a dramatic reversal from Q1's market broadening, with semiconductor stocks delivering historically strong returns driven by AI enthusiasm. The rally was enabled by repeated ceasefire announcements in the U.S.-Iran conflict, which alleviated oil price concerns and refocused investors on AI opportunities.

AI Sector Dynamics

Anthropic's Claude Opus 4.6, released February 5th, catalyzed unprecedented AI demand. Anthropic's annualized revenue surged to $47 billion (5x year-start levels), while contracted compute commitments increased tenfold. This created severe supply bottlenecks, particularly in memory chips.

High-bandwidth memory suppliers (Micron, Samsung, SK Hynix) more than doubled prices, with combined profits soaring 963% to $96 billion in the recent quarter. This represents a significant portion of the $150 billion in quarterly capex spent by top five hyperscalers (Amazon, Google, Microsoft, Meta, Oracle). Goldman Sachs projects $765 billion in total U.S. AI investment for 2026.

Market Risk Indicators

Semiconductor volatility reached "fever pitch" levels, with multi-percentage-point daily swings becoming routine despite stocks trading near all-time highs. This pattern mirrors the late-1990s tech bubble—the only historical period where such volatility preceded major drawdowns rather than following them.

SpaceX's record IPO raised $75 billion at a nearly $2 trillion valuation, exemplifying elevated risk appetite.

Portfolio Strategy

AIM's Growth, Moderate, and Conservative strategies maintained above-neutral equity exposure while avoiding concentrated AI positions. Japan and Biotech provided strong positive contributions. Energy positions faced headwinds despite oil remaining an effective hedge given persistent Strait of Hormuz disruption risks.

The firm views current AI-supplier positioning as increasingly risky, favoring diversified exposure while semiconductors could exceed 20% of benchmark indices.