Good morning, investors. We have started the week at yet another record in the S&P 500. Given what’s felt like an endless string of all-time high, it’s natural to ask when the next pullback will hit.

But right now, the fundamentals look more disconnected than ever from the charts.

You can be bullish on AI and cautious about AI stocks at the same time.

Chip stocks have rallied to extreme levels that have only been hit twice in three decades, even as the underlying earnings broadly support the AI trade.

For the first time since the internet bubble, the PHLX Semiconductor Index (SOX) now trades 36% above its 50-day moving average.

As Bespoke Investment Group highlighted in a note Monday, the only two times this has happened was during the dot-com bubble.

Momentum in chips has pushed the rest of the index higher.

The Nasdaq 100, for instance, similarly trades nearly 15% above its 50-day moving average for just the third time in almost three decades.

The previous two instances happened during the Great Financial Crisis and dot-com crash.

Now, violent price action doesn’t completely undermine the fundamental story.

Nvidia’s full-year earnings, for instance, are expected to grow 73%, while those of AMD and Broadcom are forecasted to accelerate 75% and 66%, respectively, over the current fiscal year.

And as Opening Bell Daily covered Monday, Micron continues to look like one of the cheapest AI stocks on the market despite rising more than 700% over the last year.

Meanwhile, hyperscaler spending continues to rise and demand for AI memory and compute continues to outpace supply.

Any caution at this point stems from price action.

Semiconductor stocks, as measured by SOX, have surged 69% since the end of March.

The longer a rally like this continues, the higher the odds of a pullback.

When the semiconductor index made a similar move in 2009, it did eventually deliver a generational rally but only after a period of consolidation.

To be clear, none of this is meant to dash any optimism on the AI trade.

The cash flows, capex, and technology all continue to surpass expectations.

That said, pullbacks are table stakes for any market cycle.

Being right about a new technology doesn’t guarantee accuracy on timing.

Quantify Funds is building actively managed funds that seek to pay weekly dividends from the performance of bitcoin, gold, and US stocks. 

$1 of ISBG gives $2 of total exposure to bitcoin & gold. 

Governments print. We stack bitcoin & gold.

📊 April inflation data is due this morning. Economists see core CPI rising 0.4% month-over-month and 2.7% year-over-year. But the key metric will be the housing component, which is likely on the rise. (Barron’s)

🚢 President Trump said the Iran ceasefire is “on life support.” He said Tehran sent an “unacceptable” counter to the White House’s latest proposal, and the state of the month-old truce has weakened substantially. (CNBC)

📈 Micron’s rally helped DRAM become the fastest ETF to $6.5 billion. The fund hit the milestone in just 36 days, faster than BlackRock’s bitcoin ETF, IBIT, which took 43 days. (Yahoo Finance)

🍻Want more financial news, but after the closing bell? Thousands of readers trust Brew Markets for their end-of-day analysis. I’ll handle your morning dispatch, and you can wrap up your afternoons with Brew Markets from Morning Brew — sign up free.

🗓 May 12, 1933: President FDR signed the Agricultural Adjustment Act into law, marking the government's first major intervention to lift farm prices and step into commodity policy.

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