Latest Market Commentary Second Quarter 2026

Have you watched “Knife Edge: Chasing Michelin Stars” on Apple TV?  It’s a compelling look at the extreme pressure chefs face as they pursue the prestigious stars awarded by the Michelin Guide.  For example, a chef might create the same dish 100 times to identify the specific layers of notes that make their dish stand out.  Observing these chefs and business owners’ relentless pursuit of mastery resonated with me on a deep level.

While chefs acquire knowledge by working hands-on with food, I pursue knowledge through books, classes, and interactions with smart people. I’ve accumulated lots of knowledge and experience over these past twenty-six years.  And like the chefs, the sacrifice demanded seems continuously greater as I pursue the next level.

Chefs look at a wide range of ingredients and culinary techniques, and like investments, can create experiences that are totally unique.  We are acting in a world that’s always changing. And what worked in the past may no longer apply.  The June 2026 initial public offering (IPO) of SpaceX, the aerospace company founded by Elon Musk, illustrates how much times have changed.

SpaceX is an exciting company.  However, it lacks the potential to increase its valuation to the degree that a company like NVIDIA has achieved since its IPO.  NVIDIA, the world’s largest company, went public in 1999 with a market capitalization of $75 million. ¹  Today, its market capitalization is $5 trillion.  That’s more than 66,000 times bigger than its IPO size.  Founders along with their venture capitalists are taking companies public much later than formerly, having realized they were leaving money on the table. ²  Unlike NVIDIA, SpaceX has gone public as a mature company. As a result, it might, at best, eventually double its market capitalization. With a market capitalization of more than $2 trillion, SpaceX is already one of the world’s top 10 largest companies. ³

IPO valuations are just one symptom of an overvalued U.S. stock market.  The Buffett Indicator, which compares market capitalization to gross domestic product (GDP), shows that the market is at its highest valuation in more than 50 years.  The Wilshire 5000 to GDP ratio stood at 235.9% as of June 16, 2026, versus about 56% at its twenty-first century low in February 2009.⁴

Overall, the U.S. stock market relies too heavily on technology, which accounts for 60% of its market capitalization.⁵  The semiconductor industry now accounts for 20% of the S&P 500, which was up 9.55% year-to-date through June 30, 2026.  Semiconductor stocks are estimated to account for approximately 70% of the index’s market-cap gains in 2026.  So, without semiconductor stocks, the S&P 500 index is approximately up 3% year-to-date.⁶

During the past quarter, we’ve seen a pullback in the prices of the Magnificent Seven companies that have been spending heavily on AI.  Could a correction in semiconductors be next and what could be some possible impetuses for a reversal?  One possibility is the war with Iran has created a global shortage of helium, which is essential to the process of making chips.⁷  The helium shortage could create a slowdown in chip production.  NVIDIA hasn’t participated in the semiconductor rally this year, but have you met anybody recently that hasn’t told you they own the stock?  AI-related stocks may also suffer if demand for AI fades once the AI labs stop subsidizing their plans and companies switch to cheaper open source Chinese models, “meaning they can be downloaded and run on local hardware, out of reach of governments or the labs themselves.”⁸  Uber’s CTO Praveen Neppalli Naga disclosed the company used its 2026 AI budget in the first four months of the year.⁹  It’s been reported that companies like Coinbase and Airbnb have already moved AI workloads to Chinese models such as Deepseek and Qwen.¹⁰ “But the American government could one day impose limits on the domestic use of Chinese AI.”¹¹

The market seems more volatile than historically with faster boom and bust cycles for certain sectors and stocks.  It feels similar to the total return swap trades Archegos made back in 2020 – 2021 but we’ve recently seen it in Bitcoin, Oracle, and gold and silver.  Today’s price action could be due to much broader use of leveraged ETFs and options with U.S. listed exposure at a record of over $460 billion for leveraged ETFs.¹²  It’s Soros’ reflexivity 2.0, a levered gamma trap feedback loop.

Global: uncertainties might affect stocks.  The future resolution of the conflict with Iran is unknown, which could prolong the effects of inflation.  The future of interest rates is also unclear.  Although new Fed Chair Kevin Warsh was expected to favor interest rate cuts, he threw the market a curve ball and signaled the possibility of rate hikes.  The two-year yield rose in response to his comment.

After raising cash late last year, we continue to hold fixed-income securities to provide some stability in client portfolios.  We’ve also taken positions in select private market funds and hedge fund strategies that have historically had low correlation to public markets.

I don’t want to invest indiscriminately at the current high valuations.  To me, that feels like spinning a roulette wheel. Instead, we will hunt for more reasonable valuations.  Pullbacks in valuations could provide opportunities.

As always, thank you for the trust you have placed in me and in 7Summit Advisors.  We work hard to earn that trust each day.

Sincerely yours,

Li Chang

1. ConvertBond, “Valuation at IPO: Microsoft $775M (1986) …” LinkedIn post, accessed June 30, 2026, https://www.linkedin.com/posts/convertbond_valuation-at-ipo-microsoft-775m-1986-share-7466828645890764800-mRe1/
2. Sebastion Mallaby, The Power Law: Venture Capital and the Making of the New Future (New York: Penguin Press, 2022, [161].
3. Anand Chokshi (@anandchokshi19), X (formerly Twitter), "Most Valuable Companies," June 2026, https://x.com/anandchokshi19/status/2066807226103480402.
4. “The Buffett Indicator: Market Cap to GDP,” Longterm Trends, https://www.longtermtrends.com/market-cap-to-gdp-the-buffett-indicator/.
5. Barchart (@Barchart), “Tech now accounts for 60% of the Stock Market, the largest market concentration in history,” X (formerly Twitter), June 16, 2026, 3:09 p.m., https://x.com/barchart/status/2066961320641958103?s=43&;t=e2gg_mw9oHxSyIF8_3iq2A.
6. Slickcharts, “S&P 500 YTD Return,” accessed June 30, 2026, https://www.slickcharts.com/sp500/returns/ytd; Lewis Krauskopf, “Sizzling Semiconductor Trade at Risk of Cooling—and Stalling U.S. Stocks Rally,” Reuters, May 13, 2026, https://www.reuters.com/business/sizzling-semiconductor-trade-risk-cooling-stalling-us-stocks-rally-2026-05-13/.
7. Ekwu Finance (@ekwufinance), “No helium = no AI,” X, June 16, 2026, https://x.com/ekwufinance/status/2038565976287940996?s=43&;t=e2gg_mw9oHxSyIF8_3iq2A; Global Market Observations (@globalmktobserv), “The global helium shortage is turning Wyoming into the world’s most critical supply hub.,” X, July 1, 2026, https://x.com/globalmktobserv/status/2041474065823600781.
8. Ekwu Finance (@ekwufinance), “No helium = no AI,” X, June 16, 2026, https://x.com/ekwufinance/status/2038565976287940996?s=43&;t=e2gg_mw9oHxSyIF8_3iq2A; Global Market Observations (@globalmktobserv), “The global helium shortage is turning Wyoming into the world’s most critical supply hub.,” X, July 1, 2026, https://x.com/globalmktobserv/status/2041474065823600781.
9. Janakiram MSV, “Uber Burns Its 2026 AI Budget In Four Months On Claude Code,” Forbes, May 17, 2026, https://www.forbes.com/sites/janakirammsv/2026/05/17/uber-burns-its-2026-ai-budget-in-four-months-on-claude-code/.
10. Yuhas (@yuhasbeentaken), “here’s the list of western companies moving ai workloads to Chinese models:,” X, June 24, 2026, https://x.com/yuhasbeentaken/status/2071464716786950223.
11. 1 Jonathan Cheng (@JChengWSJ), X (formerly Twitter), post, June 24, 2026, https://x.com/JChengWSJ/status/2070371727952294055.
12. Global Market Observations (@globalmktobserv), “Leveraged speculation in US markets is EXPLODING:,” X, September 16, 2025, https://x.com/globalmktobserv/status/2067976196076216600.