AFS Markets Blog: Midday 13/08/2026

• Meanwhile in markets, got any Nvidia? The king of the AI boom/bubble has rallied to close but below its all-time high;

• On our AI markets screener the recovery in AI stocks – hardware and hyperscalers – is unmistakable. Nvidia is just a smidgen – five percent – below its ATH. Other AI names that have their ATHs in their sights are ASML (down 8% from the peak), TSMC (down 3% from the peak), Amazon (down 6% from the peak), and Microsoft (down 9% from the peak). Furthermore, of the twenty stocks on our screener, thirteen are up over the past four weeks. Often with double digit gains. Such as Coreweave (rents out AI compute), which is leading the pack with a fifty percent four-week gain. Oracle, the whipping boy of credit markets, has rallied more than twenty percent;

• We’re not enlightened enough to deduce the real reason for the recovery in AI stocks (note that credit spreads on the pack of AI bonds that we track havened widened further). Of course, these stocks were heavily oversold after the early summer carnage. In that regard, a rebound was probably inevitable. Furthermore, I notice a distinct pattern of stocks often rising after the company released earnings. The days of indiscriminate selling after the earnings releases are clearly over;

• I had our resident Large Language Model (LLM) bot – Gemini 3.6 – analyze Bloomberg earnings reports on a slew of tech companies, starting with Samsung on July 30. According to the LLM’s analysis, stocks that are on the rise are the hardware providers reporting insatiable demand for chips and gear and the hyperscalers that report upfront returns on massive investment: Microsoft, Amazon, and Palantir. Losers are Alphabet and Meta and several hardware providers (AMD, Cisco). As a tourists’ tourist on the AI sector, I have no clue if the LLM is right. What I would add is that the underperformance of stocks like an AMD and Alphabet is only relative. The latter is up nine percent YTD and almost seventy percent over the past 12 months. AMD’s performance is even more stellar;

• In the greater scheme of things, AI’s problems – unprofitable LLMs and circular financing schemes – haven’t been solved. In case you wondered;

• Elsewhere, Brent crude futures and Dutch natural gas futures prices are down several percent for the day on no news or headlines. I think the price declines are a textbook case of what isn’t happening. For starters, notice the lack of US or Iran air strikes. I can vaguely remember the US disabling a ship that was breaking the blockade earlier in the week. But without a response from Iran as far as I can tell;

• More importantly, Al Jazeera’s live blog is quoting a geopolitical analyst as saying that the Gulf nations have accepted the new reality in the Strait of Hormuz. That is that the Strait will be managed by Iran. For the large part at least. Now, President Trump can scream and claim all he wants that he controls the Strait. I would point at a Wall Street Journal story mentioning that of 14 merchantmen that crosses the Strait on Tuesday, 11 took the eastern route that Iran manages. Nuff said as they say. The market couldn’t care less if the Strait remains an international waterway or is managed by Iran. Punters only care if more ships get through. Which seems more likely if the aforementioned geopolitical analyst is to be believed;

• Furthermore, with incessant stories of dangerously low or empty US weapon stockpiles, and what seems like a quiet understanding of a ceasefire, what are the chances of a resumption of the US resuming its military campaign? I think they’re low. More importantly, the closer we get to the US midterms, the more Trump has to lose.

• On the other hand, while it’s easy to take a dig at Trump’s weak hand, we know little about the Iranian’s pain threshold, which is economic. Towering inflation tells me all I need to know: Iran’s economy is in dire straits. An unsustainable situation. Hence the reports of factional squabbling in Tehran over making a deal with the Americans, which would bring much-needed economic relief. When I see symbolic press releases of Iran joining the BRICs development bank, I ask myself: who’s going to lend to a country that’s under siege by the US?

• Concluding with some uninspiring market commentary befitting a quiet market, USDJPY and US Treasury yields are barely moving. European equities are up moderately, as are US equity futures. Looking ahead, expect a quiet day with US PPI figures on tap as the main event.

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