Monthly Report – April 2026

AI optimism overrides geopolitical risk

April delivered one of the more striking contradictions in recent memory. Both the S&P 500 (+10.5%) and the Nasdaq (+15.3%) hit all-time highs despite the looming threat of AI disruption and war in the Middle East. With the Strait of Hormuz remaining largely closed, Brent crude ended the month above $108, and peace talks between the US and Iran stalled.

The Philadelphia Semiconductor Index (SOX), made up of the 30 largest semi-conductor companies that trade in the US, tells the story (see chart below). The SOX went nearly vertical in April with the index rising close to 40% over the month. That move powered Taiwan (+26.2%) and South Korea (+38.2%), which in turn powered the emerging markets headline number. Strip those two countries out, and the EM result was closer to Europe’s more modest 6%.

The same dynamic drove the US result. Of the S&P 500’s 10.5% gain, the bulk came from technology and the hyperscalers.

With two thirds of Q1 2026 results in, 84% of reporting companies beat earnings expectations versus a historical average of 73%, with earnings growing an estimated 14.5% year-on-year.

While this is impressive it has been heavily skewed by gains from the massive increases in AI-related capex. Often overlooked is the fact that for accounting purposes suppliers book revenue and profits immediately whereas buyers capitalise and depreciate costs over years. This creates a temporary boost to profits during spending booms that often reverses when depreciation catches up.

Nonetheless the earnings growth has been unprecedented, with reports from the FT suggesting Anthropic, the company behind Claude, potentially hitting up to $100 billion of revenue by the end of this year. That would mark increases of approximately 10x in each of the last four years. Despite this, Anthropic, which is expected to raise another $50 billion this month, is projected to be the first company in history to reach a $900 billion valuation with negative free cash flow.

The IPO machine gears up

Amazingly, Anthropic, along with OpenAI and SpaceX could be one of three $1 trillion+ lossmaking companies to IPO later this year. This would be a true litmus test of the strength of the US stock market and the tech sector in particular. As an illustration, if we assume each company sells up to 10% of their equity, the market will need to raise almost $400 billion, dwarfing the $25 billion raised by Saudi Aramco, the current recordholder for world’s largest IPO.

Remarkably, the Nasdaq has recently introduced a “fast entry” rule that would allow these mega-IPOs to join the Nasdaq 100 Index after just 15 days rather than being subject to a three-month seasoning period. The weightings would also be adjusted by 3x the capital they raise, whereas companies with a small free float (less than 20%) are more typically excluded. And if that isn’t enough, insiders are expected to be allowed to sell their shares immediately rather than being locked up for 90-180 days as is more usual.

All in all, it seems like a recipe designed to turbocharge the IPO’s. Index funds will be forced to buy the stock within days of the listings, with the company’s weight in the indices increasing at 3x the rate of insiders selling out (insiders selling increases the free float). Perhaps this rewards index investors if the AI revolution still has years to run. We’re more inclined to read it as a sign that the cycle is maturing and that the rules are being rewritten to suit the sellers, not the buyers.