"Never bet against America" still holds true

No matter how many risks analysts point out facing the US financial system, including rapidly growing debt, political uncertainty, geopolitical tensions, the AI bubble, and, of course, a hawkish Fed, US markets keep climbing higher.

Just this Monday, the S&P 500 hit yet another all-time high, despite the fact that the Iran talks announced by President Trump never happened, and Iran has now said it is not negotiating with the US over the Strait of Hormuz.

Where does this confidence in the US market come?

First, despite all the challenges, including high-energy prices, the economy is still holding up relatively well, with real GDP growing at an annual rate of 1.5% in the second quarter of 2026.

Businesses are also doing well, with 86% of S&P 500 companies that have reported Q2 results beating EPS expectations and 77% beating revenue estimates, according to FactSet.

As for the AI bubble concerns, most big tech companies have delivered.

Microsoft shares jumped 15.5% after Azure revenue grew 43% year-on-year, beating expectations of 40% and pushing annual revenue above $100 billion for the first time. Paid Microsoft 365 Copilot users rose to 30 million from around 20 million three months earlier. AI spending remains huge, with quarterly capex up 70% to $41 billion, but still slightly below expectations. Microsoft also cut its annual investment forecast from $190 billion to around $175 billion.

Amazon benefited from strong AWS growth, with cloud revenue up 37% to $42.2 billion and total revenue rising 20% to $200.6 billion. The downside is that Amazon raised its 2026 capex forecast from $200 billion to $220 billion, with most of it going into AI projects, pushing its last 12-month free cash flow into negative territory at -$7.6 billion.

The only disappointment was Apple. While the quarter was strong, with revenue up 16% to $109.4 billion and iPhone sales rising 22% to $54.3 billion, guidance for the current quarter came in below expectations, with Apple forecasting 9-11% revenue growth versus the 12% analysts expected due to rising memory prices affecting Macs, iPhones, and iPads.

What is next?

If the Fed ends up raising rates and the energy crisis drags on in the coming months, the market mood could change quickly, but for now investors remain optimistic and fundamentals still support it.