The Rally Nobody Believed In Is Just Getting Started

The S&P 500 is up so much so fast that the people whose job it is to predict this stuff mostly got it wrong. That’s not a small thing.

Back in January 2026, the consensus was basically “let’s be cautious.” Nobody was expecting the market to rip like this. But here we are in May, and Franklin Templeton—a $1.68 trillion asset manager—is out here saying the party’s not even close to over. That’s either bold or reckless. Maybe both.

Here’s the thing though: they’re not alone in seeing more upside. You’ve got individual names like AMD up 81% year-to-date. Microchip up 53%. Baker Hughes up 35%. These aren’t penny stocks or meme plays. These are real companies with real demand and real earnings. When you see that kind of breadth across semiconductors, energy services, and ag commodities, you’re not looking at a narrow rally propped up by seven mega-cap stocks. You’re looking at a market that’s starting to price in a different reality than what Wall Street was expecting on New Year’s Eve.

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What Changed Between January and Now

Nobody really knows, and that’s the uncomfortable truth.

The jobs report came in hot in April—way above expectations. But here’s where it gets spicy: the same report that showed strength also had a bunch of red flags for the economy underneath the surface. The Fed is getting squeezed. They can’t cut rates because inflation is still making life expensive for regular people. But the economy is apparently strong enough that markets don’t care about rate hikes anymore.

That’s the inflection point. For the last few years, the Fed cycle dominated everything. Rates go up, stocks get crushed. Rates stay high, stocks hate it. But what if we’ve reached the point where the market just… accepted it? Where valuations got repriced and now we’re actually looking at earnings growth on top of a higher rate environment?

My read: Franklin Templeton sees what a lot of other shops haven’t fully priced in yet—that we’re transitioning from a “Fed policy panic” market to a “fundamentals and disruption” market. And that’s a lot more bullish.

The Chip Shift Is Real

Here’s where I need to be honest about something I’m genuinely uncertain about: Is the “changing of the guard in AI” narrative actually true, or is it just Wall Street finding a new story to pump?

The facts are these: Intel, AMD, and Micron all surged this week. Intel in particular is getting love on reports of an Apple chip deal, which—if real—signals something genuinely significant. The headline says Samsung, Intel, and Taiwan Semiconductor are the only three companies capable of manufacturing the most advanced chips for AI. If Intel’s back in that game at scale, that’s a structural shift.

But here’s my honest take: I don’t know if this is a real “changing of the guard” or a short squeeze finding oxygen. What I do know is that if we’re moving from an era where Nvidia was the only AI beneficiary to an era where CPU makers and memory manufacturers get a bite, that changes everything about how you construct a tech portfolio.

AMD’s 81% gain year-to-date is wild. TD Cowen raised their price target to $500 from $290 in one shot. That’s not incremental. That’s “we were way too conservative” energy. Microchip beating on first-quarter revenue guidance because of industrial and automotive chip demand is telling you that AI isn’t the only growth story anymore. The whole supply chain is winning.

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The Earnings Are Following

This isn’t 2021, where stocks got expensive and then earnings never caught up. Baker Hughes is up 35% on higher EBITDA forecasts. Morgan Stanley raised Archer-Daniels-Midland even while downgrading sentiment on it—meaning the numbers are real but they’re cautious on where it goes from here.

That’s actually the healthiest kind of bull market. Not “everything’s amazing forever,” but “the fundamentals are coming through and we’re still skeptical.”

When strategists are surprised and earnings are beating and supply chain beneficiaries are all moving together, you’re not in a fed-fueled sugar rush anymore. You’re in something more durable.

The IPO Window Is Open Again

Quick signal I’m watching: Inspire Brands (Dunkin’, Arby’s, Buffalo Wild Wings, et al.) just confidentially filed for an IPO. That’s not a huge story on its own, but it’s a tell. When private equity-backed restaurant companies start moving toward public markets, it means they think valuations are good and the window is open. The IPO market has been dead. If it’s starting to stir, that’s a sign the broader market confidence isn’t fragile—it’s actually improving.

Here’s What I Actually Think

The S&P 500 rally that “few strategists predicted” is probably real and probably sustainable for the next 6-12 months, not because of some magical new catalyst but because the market was fundamentally underpriced coming into 2026 and earnings are actually tracking to justify higher multiples.

But here’s where I diverge from Franklin Templeton: I don’t think it’s limitless. The economy is showing strength but also fatigue. Payroll growth is slowing (consensus was 55,000, remember). The Fed can’t ride to the rescue anymore. And valuations, while not insane, are no longer cheap.

The winners are going to be the companies with actual earnings power and supply-chain positioning—not the index-huggers. That’s why AMD, Microchip, and Baker Hughes are all winning while the narrative is still “growth is dead.” They’re not betting on the Fed or tech speculation. They’re betting on a global recovery in capex, energy demand, and industrial capacity.

My prediction: We get another 4-6 weeks of this momentum into the summer. Then we hit some kind of wall—either Fed hawkishness returns, or earnings disappointment starts creeping in, or both. The upside for the next quarter is real. Beyond that, I’m a lot more skeptical.