What's most frightening is not the end of the nine-day winning streak in U.S. stocks, but that oil prices have brought back the 'big Buddha' of interest rates.
Many people, seeing the pullback in the Dow and Nasdaq, judge that the bull market is over and the AI rally is cooling. In fact, the end of the nine-day winning streak in U.S. stocks is not due to a sudden weakening of market sentiment, but rather global capital beginning to recalculate valuation logic.
Geopolitical tensions in the Middle East have pushed international oil prices higher. Rising oil prices directly increase market inflation expectations, pushing U.S. Treasury yields higher and continuously cooling expectations for Fed rate cuts. Against the backdrop of the return of interest rates, high-valuation tech stocks are the first to come under pressure. This transmission chain directly affects various assets such as funds, individual stocks, crude oil, and gold, and is also the core basis for current investment judgments.
I. Complete Shift in Capital Logic: From Chasing Stories to Rational Accounting
Previously, the market dared to give high valuations to growth stocks and thematic stocks, with the core logic being optimism that the Fed would start a rate-cutting cycle, and that a loose funding environment would support high stock prices. But the rebound in oil prices has reignited inflation concerns, and the market has begun to reassess the interest rate path: if rate cuts are delayed and interest rates remain high, assets with large valuation bubbles and relying on future expectations will face price revaluation.
This is also the core change most worth noting after the nine-day winning streak in U.S. stocks was interrupted. On the surface, the geopolitical situation in the Middle East and oil price disturbances triggered a market pullback, but the essence is that interest rates have once again become the core of market pricing.
Oil prices are not just a single commodity price; their increase transmits to the entire industrial chain including transportation, aviation, manufacturing, and chemicals, raising corporate operating costs. The market is not just trading short-term oil price fluctuations, but whether medium- to long-term inflation will rise again. If oil prices remain high, inflation stickiness increases, and the Fed's easing pace will further slow down, shaking the underlying logic that previously supported high-valuation assets.
This round of adjustment is not simply a "pullback after a big rise," but the market realizing once again that interest rates are still the core factor affecting global asset pricing.
II. The Return of Interest Rates: Why Are High-Valuation Growth Stocks the First to Suffer?
The valuation of growth stocks and tech stocks mainly relies on discounting future cash flows, and interest rates are the core benchmark in the discounting process. The lower the interest rate, the higher the present value of future earnings, and the more valid the high-valuation logic; as interest rates rise, the value of future assets shrinks accordingly.
The current market is not that it no longer favors growth tracks, but rather it has begun to rationally judge whether the growth ability of individual stocks can match the current high valuations.
The trend of Broadcom is very representative. As a leader in AI chips, the company's AI business revenue is impressive, and its fundamentals maintain high growth, but the stock price still weakened after the earnings release. The core reason is that market expectations have already been fully priced in.
When individual stocks rise for a long time, valuations have already discounted future growth. Even if the earnings data is excellent, it is difficult to bring upside surprises. Under high expectations, the margin for error in assets is greatly reduced. As long as growth does not accelerate further, capital will choose to take profits. This also reminds investors that during the period of rising interest rate pressure, high-quality targets may also see adjustments due to high valuations.
Ordinary investors easily fall into traps: seeing tech stocks fall, they become bearish on AI; seeing a local rebound, they blindly chase highs. In the current market environment, capital no longer simply chases themes, but focuses on three dimensions: growth certainty, order fulfillment, and whether profits can cover valuations.
III. Major Divergence in the AI Sector: Broad AI Concepts Cool Down, Infrastructure Sees Opportunities
In the same AI industry chain, the trends of different companies show clear divergence. Marvell Technology's stock price has strengthened, in stark contrast to Broadcom. The market is not giving up on the AI track, but rather saying goodbye to the broad rally and entering a phase of refined stock selection.
We need to distinguish between two types of targets: broad AI concepts and AI infrastructure.
- Broad AI concepts: Centered on future imagination and thematic stories, they are easily hyped during periods of low interest rates and loose capital; after interest rates tighten, valuations of pure concept targets will quickly decline.
- AI infrastructure: Focused on physical links such as data centers, computing power, custom chips, network connectivity, storage, and servers, supported by real orders and inelastic demand, with stronger certainty.
Under interest rate pressure, capital is gradually shifting from pure thematic speculation to sub-sectors like AI infrastructure that have real supply-demand dynamics and order fulfillment. The storage sector, represented by Micron, follows the same logic: the expansion of the AI industry chain drives tight storage supply-demand, and real demand becomes a key support for stock prices.
In short, the long-term development trend of AI has not changed, but the logic of capital stock selection has changed: it no longer looks at the size of the story, but at the ability to realize revenue, profits, and orders.
IV. Three Major Risk Points in the Current Market
- High-expectation AI concept stocks: Companies have good fundamentals, but stock prices have already discounted years of growth; even a slight miss on expectations can trigger selling.
- High-valuation growth stocks: These assets are highly dependent on a low-interest-rate environment; rising U.S. Treasury yields will continuously compress valuation space.
- The chain risk of persistently high oil prices: If oil prices remain high for a long time, inflation may rebound, rate cut expectations will continue to cool, and all market assets will face a round of valuation re-pricing.
V. Three Directions with Allocation Value
- Energy industry chain: Rising oil prices benefit upstream energy and energy service sectors, with earnings and cash flow improving simultaneously and price support. Care should be taken to distinguish between short-term speculation and long-term supply-demand logic.
- High-cash-flow defensive assets: In a high-interest-rate environment, targets with stable business models, strong current profitability, and ample cash flow are more favored by capital.
- Core AI infrastructure: Links such as data centers, custom chips, storage, and computing hardware, relying on real construction demand, will stage independent moves amid the AI sector divergence.
Current opportunities are no longer about simply chasing a single track, but about following the capital mindset, abandoning pure themes, and focusing on asset certainty.
VI. Three Core Observation Signals for the Market Outlook (Practical Reference)
- International oil price trend: Distinguish whether the rise is due to short-term news stimulus or supply-demand-driven sustained rise, as this directly determines the strength of inflation and interest rate pressure.
- 10-year U.S. Treasury yield: Continued upward movement will keep high-valuation tech and thematic stocks under pressure; only when yields stabilize will market sentiment gradually recover.
- Capital flows: Observe rotation within the AI sector; if capital continues to flow to infrastructure targets with real orders, it indicates that the market style has completely shifted.
Ordinary investors do not need to stare at daily index movements; just focus on tracking the three signals above. Do not confuse "long-term industry trends" with "short-term price risks." No matter how good a track's prospects are, if valuations deviate from fundamentals, there will be adjustment.
The end of this nine-day winning streak in U.S. stocks is essentially driven by oil prices fueling inflation and the return of interest rates, forcing the market to complete a round of style switching: capital has officially shifted from "listening to stories and speculating on concepts" to "looking at performance and selecting assets." Understanding this transmission logic is the only way to avoid risks and seize structural opportunities. In the short term, capital markets are driven by sentiment, but in the medium to long term, they are
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