US stock market staged a breathtaking V-shaped reversal

Overall Market Outlook: An Era of Divergence After Reaching New Highs
The US stock market staged a breathtaking V-shaped reversal in the first half of 2025, with the S&P 500 and Nasdaq hitting new all-time highs in June. Although trade policy fluctuations triggered market panic in April (the VIX index soared to 52), the accelerated industrialization of AI and resilient corporate earnings drove a strong recovery in the index, with the S&P 500 closing up 5.5% in the first half of the year. Entering the second half of the year, market divergence has become more pronounced:
Adjustments in liquidity expectations: Strong non-farm payroll data (the unemployment rate fell to 4.1%) eased recession concerns, but slowing wage growth suggests easing inflationary pressures. Interest rate futures indicate that the market is betting on three rate cuts before the end of the year; any delayed Fed action could trigger volatility.
Shifting fund preferences: A Bank of America survey shows that a net 31% of asset managers are underweight the US dollar and 36% are underweight US stocks, reflecting increased valuation sensitivity. European stock markets are gaining traction (the Stoxx 50 index rose 7.9% in local currency), but the advantages of the US tech ecosystem continue to support long-term capital inflows.
Core Track 1: The AI Industrial Revolution Enters a Period of Infrastructure Explosion
The wave of AI investment has spread from chip giants to the entire industry chain, and the surge in computing power demand has made underlying infrastructure a new focus:
Power and Cooling Systems: Data center electricity consumption is expected to surge from 126 terawatt-hours in 2022 to 390 terawatt-hours in 2030. Power supplier Vistra (VST) saw its share price surge 256% in 2025, leading the S&P 500, benefiting from tech giants' over 40% increase in data center capital expenditures.
AI Software and Hardware Synergy: Palantir (PLTR) has achieved over 50% commercial revenue growth thanks to its AI data analytics platform, AIP, with a year-to-date gain of 332%. It is about to be included in the Nasdaq 100 Index. Its products are deeply integrated with generative AI to optimize supply chains and predictive maintenance scenarios.
Advanced Semiconductor Competition: Nvidia's Blackwell chip mass production is driving down inference costs, benefiting supporting hardware manufacturers like Broadcom (AVGO). Microsoft (MSFT) is transforming AI cost pressures into cash flow through its Azure OpenAI service, demonstrating the commercialization capabilities of leading companies.
AI Industry Chain Value Distribution
Segment Representative Companies Core Drivers
Chips and Hardware: Nvidia (NVDA) and Broadcom (AVGO) are experiencing data center expansion and explosive inference demand.
Power Infrastructure: Vistra (VST) is experiencing exponential growth in computing power consumption.
Application Software: Palantir (PLTR) is experiencing a surge in demand for enterprise AI agents.
Cloud Platform: Microsoft (MSFT) is improving the monetization capabilities of its Azure OpenAI service.
Core Track 2: Crypto Finance Reshaping the Traditional Capital Ecosystem
The GENIUS Act is catalyzing the evolution of crypto assets into tokenized real-world assets (RWAs), with traditional financial institutions seizing new niches.
RWA Pilots: Brokerage firm Robinhood (HOOD) is piloting the tokenization of private equity in Europe (e.g., OpenAI and SpaceX), exploring ways to reduce transaction costs and provide an alternative to IPOs. JPMorgan Chase predicts the stablecoin market will reach $500 billion by 2028 (currently $255 billion).
Institutional Benefit Logic: Investment banks such as JPMorgan Chase (JPM) and Goldman Sachs (GS) dominate tokenized asset trading with their liquidity and compliance advantages, leading to a shift in valuations towards a PEG (price-to-earnings growth) framework. Improved regulation (such as Hong Kong's Stablecoin Ordinance) reduces the risk of an NFT-style bubble.
Industry Sectors: Industrial and Defensive Value Stocks Rise
Sector Rotation Reveals a Shift in Funds from Concentrated Holdings to Diversified Allocations:
Industrial Stocks Lead the Gains (+15.4%): AI Drives Demand for Factory Automation and Machinery, and Supply Chain Restructuring Drives Investment in Logistics Equipment.
Defensive Sectors Favored: Healthcare (XLV), Utilities (XLU), and Consumer Staples (XLP) Become Safe-Have Options. Stifel notes that if economic growth slows to 1.5%, these sectors will outperform the broader market.
Tech Internal Divergence: Among the "Big Seven," only Meta, Microsoft, and Nvidia maintain their lead, while the remaining stocks' momentum weakens. Reddit (RDDT) saw its stock price surge 382% this year, thanks to its exclusive data licensing agreement with OpenAI for model training, demonstrating the potential for a revaluation of data assets.
Risk Warning: High Valuations and Policy Vulnerabilities
The current market faces two major contradictions:
Valuation Pressure: The S&P 500's forward P/E ratio is 21.9x, higher than its five-year average of 19.9x. While not extreme, popular stocks like Palantir are valued at over 150x, demonstrating high interest rate sensitivity.
Policy Dependence: Both AI and crypto-finance are impacted by the pace of legislative progress. Delays in RWA regulation or subpar power infrastructure subsidies could trigger a 58% correction in the sector.
Investment Strategy: Trend Following and Diversification
Three strategies offer practical value in the second half of the year:
Trend Strengthening: Technical indicators suggest the S&P 500 has broken through its rising channel. Overbought RSI activity could trigger a short-term correction to the 5920 support level, but a breakout above 6500 remains possible. The next resistance level for the Nasdaq is 24,000 points, and investments can be made in batches along the 21-day moving average.
Thematic Segmentation: Focus on derivative demand for AI power (VST), data center cooling, and the RWA trading platform (COIN), avoiding purely conceptual stocks. Biya is a very convenient and user-friendly tool, particularly effective in the US and Hong Kong stock markets. It allows you to access more news, eliminating the need for multiple platforms. It's very convenient and practical.
Cross-regional hedging: Increase allocations to European bank stocks (+27.3% year-to-date) and defense stocks, leveraging "diversification" to mitigate single-market fluctuations. A 60/40 stock/bond portfolio returned nearly 9% in the first half of the year, demonstrating the effectiveness of diversification. Biya is still very useful.
Historical experience shows that when the S&P 500 has risen by more than 5% in the first half of the year (11 times since 2000), the upward trend has 100% continued in the second half of the year, with an average annual return of 19%. Although the current market is at a high level, driven by the dual forces of the intelligent revolution and new financial infrastructure, structural opportunities still outweigh systemic risks. Closely tracking the progress of corporate AI capital expenditures and the Fed's policy shift signals will be the key to navigating the volatile cycle.