If Trump’s Bull Market Does Cool Off, These Stocks Could Reverse Fast — and These Others Might Keep Powering Higher
If Trump’s Bull Market Does Cool Off, These Stocks Could Reverse Fast — and These Others Might Keep Powering Higher
Joey Frenette Sat, June 27, 2026 at 3:45 PM UTC
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24/7 WallSt
The Trump bull market has held its ground despite the geopolitical shocks that sent investors scrambling just a few months ago. The U.S.-Iran conflict that ignited on February 28, 2026 rattled global markets, and the prolonged closure of the Strait of Hormuz disrupted roughly 20% of the world's seaborne oil trade. A ceasefire took hold in early April, and as of mid-June 2026, mediators announced a memorandum of understanding aimed at formally ending the conflict within 60 days. Shipping levels through the strait remain well below normal, but the trajectory toward resolution is clearer now. Against that backdrop, AI remains the dominant market narrative, and it seems investors are far more afraid of missing the next chapter of the AI revolution than of any lingering risk from the Middle East.
Any way you look at it, the market's recovery speaks to a remarkable resilience in the face of genuine geopolitical surprise. There was a real correction, but investors who held on rode one of the sharpest recovery bounces in recent memory, something that felt a lot like the rebound from the COVID crash of 2020.
The resilient market is heating up quickly, but that alone is no reason to sell the S&P
The big question now is whether the post-plunge spike overshoots, the way it did in 2021 before the painful bear market of 2022. Higher energy prices tied to Hormuz disruptions raise the odds of a Fed rate hike, but the picture grew considerably more complicated with the arrival of a new Fed chair. Kevin Warsh was confirmed on May 13, 2026 in a 54-45 Senate vote and was sworn in on May 22 as the 17th chair of the Federal Reserve. Warsh's public statements point toward tighter inflation discipline, and with inflation running above the Fed's 2% target amid elevated energy costs, markets have been scaling back rate-cut expectations and even pricing in some odds of a hike later in the year. A pause remains the most likely near-term outcome, but the calculus has shifted.
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While markets have been impossible to predict at almost every step, focusing on relative value makes a great deal of sense right now. Stocks are broadly higher, but not everything is participating equally in the upside.
Microsoft has lagged, Intel has led. Is there a rotation case here?
The mega-caps have done more than their fair share of the lifting, and with semiconductors running hot, the sector may be getting a bit ahead of itself. Intel (NASDAQ:INTC | INTC Price Prediction) staged one of the most dramatic reversals of the year, surging from around $30 to a peak of roughly $135 in five months. The catalyst was a blowout Q1 2026 earnings report, including a 22% year-over-year surge in Data Center and AI revenue that sent shares soaring nearly 24% in a single session. Selling a parabolic spike of that magnitude to rotate into neglected value is a trade worth taking seriously.
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Shares of Microsoft (NASDAQ:MSFT) look meaningfully underpriced by comparison. The stock is down roughly 17% year to date and sits about 25% below its July 2025 all-time high of $555.45, lagging most of its Mag Seven peers by a wide margin. You can point to the software sector selloff, heavy AI capital spending, Azure's solid but not spectacular growth, or investor impatience over the return on that investment. The underlying business, however, continues to perform. Last quarter, Microsoft posted non-GAAP EPS of $4.14 on $81.3 billion in revenue, up roughly 17% year over year, with Azure growing 39% and the commercial backlog reaching $625 billion.
The Burry signal adds weight to this thesis. Michael Burry, the investor whose subprime short was immortalized in The Big Short, disclosed a new long position in Microsoft on April 23, 2026, framing it as part of a bet on software stocks that have been unfairly punished by AI anxiety. What makes Burry's move especially relevant to the rotation argument is the hedge he put on alongside it: he simultaneously purchased put options on the Invesco QQQ Trust, NVIDIA, and the iShares Semiconductor ETF. He leaned into software he considers mispriced while protecting against a pullback in the most crowded parts of the AI trade. That pairing maps almost exactly onto the thesis here. A potential reverse head-and-shoulders technical setup in Microsoft makes it harder still to walk away from this kind of valuation gap.
The bottom line
As the semiconductor trade exhausts and markets cool from their post-conflict highs, the big year-to-date winners in the semi space look vulnerable to a correction. Microsoft, still trading at a forward price-to-earnings ratio near 26x against a five-year median closer to 34x, has the room to recover without needing any help from the rest of tech. The damage done to software valuations creates the conditions for exactly the kind of mean reversion that both the charts and a contrarian like Burry seem to be anticipating.
Can software earn its turn in the spotlight while the rest of the tech sector catches its breath? Given the depth of the selloff and the breadth of smart money moving in, it would not be surprising to see that rotation play out.
Editor's note: This update corrects Kevin Warsh's name (misspelled as "Walsh" in the original), reflects his May 22, 2026 swearing-in as the 17th Federal Reserve chair following a 54-45 Senate confirmation, updates Microsoft's year-to-date decline to approximately 17%, adds context on the mid-June 2026 U.S.-Iran deal aimed at formally ending the conflict within 60 days, and incorporates Michael Burry's simultaneous semiconductor put options alongside his Microsoft long, which were disclosed via Substack on April 23, 2026.
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Source: “AOL Money”
