Several trend indicators assessing risk outlook suggest that the recent brief drop in global equity markets, particularly the relative weakness of U.S. stocks, appears more as short-term downward noise within a long-term bull market phase, rather than indicative of a comprehensive market reversal. One key trend indicator shows that defensive sectors and value stocks have yet to outperform the broader blue-chip stocks and AI-affiliated tech giants represented by the S&P 500 index, indicating that the bull market trend driven by the AI investment frenzy still has substantial room for continuation. Since September, NVIDIA's "century partnership" with long-time rival Intel, and OpenAI's signing of multi-billion dollar AI computing infrastructure contracts with tech leaders such as Oracle, NVIDIA, AMD, and Broadcom, have raised concerns among some Wall Street analysts about this unusual "cycle of financing" potentially inflating an AI bubble, leading to a prolonged bear market reminiscent of the post-"Internet bubble" stock market. However, multiple risk assessment indicators indicate that the momentum of the U.S. bull market remains robust, making a substantial market reversal unlikely. Additionally, analysts from financial giant Goldman Sachs believe that despite the rising valuations in the tech sector, they have not yet reached historically bubble levels. Goldman Sachs noted that the current tech stock rally is primarily driven by the fundamentals of tech-weighted stocks rather than the irrational speculative frenzy of numerous non-profitable companies that characterized the Internet bubble period. Notably, AI leaders like NVIDIA and Google possess exceptionally strong balance sheets, which is a key difference from previous bubble characteristics.

The logic of AI computing power overshadows short-term noise, asserting that the core logic of the bull market remains prevalent. Analysts from Goldman emphasized that this wave of AI investment is still in the "opening stages," primarily based on the productivity and operational efficiency improvements brought about by AI applications like ChatGPT and Claude within enterprises (e.g., at firms like Goldman Sachs, AI deployment has only just begun). To achieve these improvements, an incredibly vast AI computing power infrastructure is essential. "The tremendous economic value promised by generative AI justifies the massive investments in AI infrastructure currently being made by global businesses," wrote analysts from Goldman Sachs.

Since 2023, the unprecedented AI investment frenzy has driven a long-term bull market narrative in AI computing power, which is the core logic behind the U.S. stock market—with seven major tech companies gaining substantial weight—and a significantly climbing global stock market. Based on current core trend indicators and news dynamics surrounding the AI bull market, the AI-driven global stock market rally is far from over. Recently, prices for high-performance DRAM and NAND series storage products surged, coupled with OpenAI—the world's highest-valued AI startup—securing over $1 trillion in AI computing infrastructure deals, and Taiwan Semiconductor Manufacturing (TSMC) announcing exceptionally strong earnings surpassing expectations while raising its 2025 revenue growth forecast to a 30% range. These factors have collectively reinforced the "long-term bull market narrative" for AI computing infrastructure sectors, including AI GPUs, ASICs, HBM, data center SSD storage systems, liquid cooling systems, and core power equipment.

As the earnings season unfolds, the strong performance of TSMC and ASML undoubtedly reinforces the "long-term AI bull market" narrative in the global stock market and strengthens the "AI investment belief" among tech stock believers. This suggests that the current "super bull market" led by the global AI computing industry chain involving NVIDIA, TSMC, Broadcom, and Micron Technology is not yet over. Over the near term, this supply chain will continue to be favored by global investors. According to top Wall Street firms like Cantor Fitzgerald, HSBC, and Morgan Stanley, NVIDIA remains the core beneficiary of the trillion-dollar AI spending wave, which is reflected by Cantor and HSBC recently raising NVIDIA's target stock price significantly. Notably, HSBC upgraded NVIDIA's stock rating from "Hold" to "Buy," strongly countering the current market's "AI bubble theorists." More significantly, HSBC raised its target price for NVIDIA from $200 to $320, setting it at the highest level on Wall Street. The new target means that NVIDIA, the world's largest company by market capitalization, has enormous upside potential of up to 80%. If this target is achieved, NVIDIA's market capitalization could reach approximately $8 trillion, incredibly high compared to its current market cap of about $4.4 trillion, which has long held the top spot globally. This year, NVIDIA's stock price has consistently set new highs, with a rise of 40% year-to-date.

Assessing whether the stock market bull appears to be on the verge of collapse: Five key trend indicators can provide a relatively objective perspective to filter market behaviors, thus mitigating the impulses driven by daily news headlines that influence asset allocation strategies or speculative decision-making. Numerous methods can describe market trends. The following five market images (based on ETF tracking) serve as practical starting points for formulating "calculated risk assessments" regarding short-term risk preferences in the stock market. All common warning indicators apply to market trends or investment sentiment assessments, and analysis based on the following five key indicators indicates that unless compelling evidence suggests a reversal of the primary trend, the prevailing market bias can be assumed to continue, meaning the ongoing bull market in U.S. stocks since 2023 remains on a positive trajectory.

Beginning with the S&P 500 index weekly trend, a widely followed "broad-based" measure—the S&P 500 ETF (SPDR S&P 500 ETF, ticker: SPY)—offers insight into overall stock performance. To dampen some noise, weekly statistical data is utilized here (and below). Despite various alarming headlines following last Friday's market sell-off, the weekly retreat remains very modest, fitting into a historical pattern of normal fluctuations. The S&P 500 ETF dropped below its 5-week moving average, but this is categorized as a routine event and rarely signifies a long-term bearish trend. More concerning signals would arise in a pessimistic scenario where the 5-week trend line (black line in charts) drops below the 20-week moving average (green line), indicating a remarkably significant downshift in market sentiment. Currently, such a directional shift or sentiment change is not imminent.

Relative Trend of Essential Consumer Goods Sector Compared to the Broader Market As a key verification metric for analyzing bearish/bullish sentiment regarding the broader global equity market and the benchmark index—the S&P 500 index, reviewing the overall performance of essential consumer goods stocks (ETF ticker: XLP) versus the U.S. stock market (SPY) is highly valuable. In periods of rising market pressure, essential goods typically outperform the overall equity market as investors begin actively seeking safe havens. During phases prioritizing lower-risk asset exposure, this ratio (red line) surges significantly. However, recent data shows that the essential goods ETF is still significantly underperforming compared to the U.S. stock market (SPY), consistent with the above-mentioned weekly trend of the S&P 500.

Value vs. Growth Another critical verification for bullish/bearish trends in the S&P 500 index involves observing the relative performance of the largest value stock ETF (ticker: VTV) compared to the growth stock ETF (ticker: VUG). In line with historical patterns related to essential goods relative to the S&P 500 index, value stocks tend to vastly outperform growth stocks during periods of market volatility and rising pressure—implying a significant upward trend in the VTV-VUG ratio. This was indeed the case during the major drawdown in global equity markets in 2022 resulting from the Federal Reserve's aggressive rate hikes. Yet, recent historical data indicates that market enthusiasm for tech stocks benefiting from the unprecedented AI investment wave remains vibrant, evidenced by the persistent underperformance of value stocks (VTV) compared to growth-focused ETFs (VUG) associated with AI. This provides further vital clues corroborating the notion that "the primary trend of the broader stock market remains intact."

Fueled by the remarkable price surges and sustained robust performance of major tech giants like NVIDIA, Meta, Google, Oracle, TSMC, and Broadcom, an unprecedented wave of AI investment has swept through U.S. and global equity markets, driving the S&P 500 index and MSCI global index significantly upward from their yearly lows in April, with recent all-time highs. Analysts from Cantor Fitzgerald have asserted that the rapid and extensive deployment of generative AI applications validates that this wave of AI is not, in any sense, a bubble. "In the past 12 months, generative AI has been adopted by major global recommendation systems—search has transitioned to generative AI, social media has shifted to generative AI.” "User-generated innovative content and AI-based advertising recommendation engines have all shifted from traditional machine learning to generative AI. Just the massive transition from traditional computing to generative AI has seen NVIDIA anticipate up to $2 trillion in capital expenditures. We are definitely not in a bubble; rather, the market is beginning to realize how ‘high-quality’ AI can deliver significantly positive investment returns," Cantor Fitzgerald articulated in their bullish report predicting NVIDIA's stock price to reach $300.

Low Volatility Stocks vs. S&P 500 Another window for assessing market primary trends is comparing low volatility stocks (ETF ticker: USMV) with the overall performance of the S&P 500 index ETF (SPY). Low volatility stocks are considered a defensive subset of the market, which is why they often outperform the broader market during periods of heightened market pressure and cautious investor sentiment, typically indicating widespread bearish concern. Conversely, during substantial upward periods for low volatility stocks, market risk aversion significantly plummets, frequently leading to prolonged bearish market conditions. During such bearish phases, the USMV-SPY ratio tends to surge. Here, however, we see a contrasting scenario: this ratio continues to decline, signaling that this market sentiment measure has yet to emit any significant signals regarding a breakdown or turning point in bull market sentiment.

Commodities vs. S&P 500 Finally, we focus on the overall performance of commodities (tracked by ETF ticker: GSG) relative to the equity market (SPY). With recent concerns regarding “tariffs potentially driving inflation,” this ratio serves as a timely indicator of the market's level of concern over this issue. During the surge of inflation in 2022, the commodities ETF GSG substantially outperformed the S&P 500 index ETF, reflected by a significant uptick in that ratio. However, in contrast, this ratio has been persistently declining over recent months, suggesting that while market inflation worries may be elevated, they remain relatively tempered compared to historical data and thus have yet to pose an urgent threat to the robust trajectory of the stock market.

Notably, the underlying logic of the above analytical framework is subject to change, and at some point, it will inevitably do so. However, the current investment perspective indicates that the bullish upward bias in the stock market remains intact. For a compelling assertion that the upward trend has peaked, the stock market requires a substantial degree of further deterioration, where concentrated indicators of market caution and selling pressure must exhibit robust momentum outpacing the S&P 500 index. The specific timing of such a turning point remains uncertain, but these core trend charts suggest that the probability of the market having reached a peak or being on the verge of a peak is still very low. When a significant shift occurs in global equity markets' risk preferences, we are likely to observe important new evidence of the bull market turning points or the onset of a bearish market in the listed indicators.