AI can justify today's valuations, but only if revenue growth translates into sustained earnings growth. The market is already pricing in massive adoption, so good execution may no longer be enough. Companies need exceptional execution.
As for tightening, this looks more like a precautionary inflation response than an aggressive hiking cycle. Unless inflation accelerates materially, central banks are unlikely to tighten indefinitely.
For the bull market, the key risk is not rates themselves but earnings. Bull markets usually end when profits weaken, liquidity dries up, or recession risks surge. So far, earnings remain relatively healthy despite higher rates.
My view: this is more likely a late-cycle repricing than the beginning of the end. Expect higher volatility, narrower leadership, and periodic corrections. The bull market remains intact unless AI earnings disappoint significantly or economic growth deteriorates enough to trigger a broad earnings recession.
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