Behind Wall Street’s Scorching Quarter

**Travis Hoium** (0:02)
Wall Street just had its best quarter since 2020 Motley Fool Hidden Gems Investing starts now.
Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Lou Whiteman and Jason Moser. And guys, this was a surprise to me when the quarter ended, technically yesterday, but Lou, this was the best quarter that we've had in six years since 2020 So what are your thoughts? What are the highlights here?

**Lou Whiteman** (0:28)
All right, so first of all, I got to be that guy. You know I'm that guy. We need to mention that the lows for the year were on March 30th, which you might realize if you're good at calendars is a day before the beginning of this quarter. So we timing worked out pretty well for us.

**Travis Hoium** (0:45)
And it just so happened that the first day of the third quarter was not great either. So right. Right.

**Lou Whiteman** (0:51)
Exactly. So there is a little asterisk here, but look, yeah, this is impressive. Amazing even. We got pretty lucky on the starting point, but don't argue with the gains. Even with that, we're up 9% for the year in the S&P, 12% for the NASDAQ. Hey guys, I'm old fashioned, but I would take that for a full year every year. So this is still good. You know, a lot of this, we can get into the details what it was, but AI is still working. People are still the optimists still outweigh the pessimists here. And we are, may it long continue.

**Travis Hoium** (1:25)
Yeah, Jason, it does seem like there's certain segments of the market that are hotter than others. And AI is really the story, although not necessarily the same companies that were hot in 2024 and 2025

**Jason Moser** (1:35)
No, it's been a little bit different here. And we saw for the card, I mean, chips and AI infrastructure really are what are driving the bus here, right? If you look at the Philadelphia Semiconductor Index, that was on track for its best quarterly gain on record. I think it was close to 90% in the quarter.

**Travis Hoium** (1:53)
So a single quarter, the index was up almost 90%.

**Jason Moser** (1:57)
That's just wild. It is wild. And you look at the iShares Semiconductor, the ticker there is SOXX, that's up 100% this year, year to date. And most of those gains came in the second quarter as well. So clearly a lot of interest in the chip makers and the AI infrastructure providers. And yeah, I think it seems like that's poised to continue.
I know we kind of keep hearing that drumbeat of when is it going to end?
I just don't think it's going to happen yet. The enthusiasm is still out there. And these hyperscalers are poised to continue investing big time capital expenditures. I think the question we had was with these huge numbers that they're investing in 2026, I think all total, you're talking about like somewhere around like $800 billion or something like that. Is that going to continue into 2027? And signs right now, based on what leadership at these companies are saying, signs all point to yes.

**Travis Hoium** (2:58)
Yeah, I just want to remind people that when no one thinks it's a bubble, that's when it's actually a bubble.

**Lou Whiteman** (3:04)
So that is the drum beat is bullish, right?

**Travis Hoium** (3:07)
The drum beat is bullish. And the other thing is if we go back to 2000 in the telecom build out, which would be, you know, probably the most similar to now, the market started to go down when that AI spend or when the telecom spending flatlined. It didn't actually decline. It just flatlined for 20 years. So just a little bit of context there. Lou, the other thing I wanted to bring in here was some of the big names that are up. We've heard about Micron, a new trillion dollar company, but Intel up 243% so far this year. You have semiconductor companies like LAM Research up 124%.
Applied Materials is up 146%. Sandisk, I used to have some Sandisk products. Maybe I should have spent a little bit of money on Sandisk stock. Up 741%.
The numbers and the concentration of the gains are what really seems striking to me. If you just look at it, you can look up heat maps for the S&P 500, for the NASDAQ 100 And you see those companies up huge and yet Meta is down 10%, Tesla is down, Microsoft is down 20%. So what here is actually sustainable?

**Lou Whiteman** (4:14)
That's a great question. I will say though, as far as the overall market, I like the leadership change. If it's only the same companies, a handful of companies going up indefinitely, that seems less sustainable than the market continues to rise on the strength of others. I don't think these chip stocks that's sustainable. I don't think that they are going to continue to power us higher. If anything, I think I would look back to some of the hyperscalers to Mag 7