2nd Quarter 2026

AI, memory markets and equity pricing are all in disequilibrium because subsidies, constrained supply and increasingly thematic trading are obscuring fundamental value.

• The Philadelphia Semiconductor Index rose nearly 88% in the quarter, the S&P 500 gained more than 15%, SpaceX rose 66% in its first days of trading, and a DRAM ETF attracted $20 billion of flows after launching in April.
• AI providers initially subsidized usage to build scale: some ChatGPT and Claude users consumed thousands of dollars of compute for subscriptions costing about $200 per month, while Sora was free and Cursor subsidized premium users.
• Usage-based pricing exposed the weakness of this model: Uber used its entire annual token budget in April, Microsoft cancelled internal Claude Code licences after exhausting its budget, and one company was rumoured to have spent $1 billion on tokens in one month.
• AI pricing remains unstable because Anthropic, Google, OpenAI and Cursor have offered free tokens or equity-linked subsidies to startups, token prices have fallen, and Meta has introduced a very inexpensive API; this makes customers' return-on-investment calculations unreliable.
• Strong AI data-centre demand has pushed DRAM and storage prices up by hundreds of percent, pressuring consumer-electronics companies: Apple may raise iPhone and iPad prices, Nintendo raised the Switch 2 price, and GoPro warned of substantial doubt about its ability to continue as a going concern.
• Equity markets are also being distorted by passive flows, thematic and leveraged ETFs, institutional baskets and short-term algorithmic trading, which can price stocks according to index membership, exposure or transient signals rather than company fundamentals; the excerpt then begins a discussion of benchmark construction.

Takeaway: Investors should expect a bumpy and volatile market until AI inference, memory and capital-allocation prices reach a stable, unsubsidized equilibrium, while long-term fundamental analysis may become more valuable as short-term signals and thematic vehicles proliferate.