STOCK markets around the world surged to record highs in April, defying geopolitical tensions, volatile energy prices and uncertainty over interest rates, as investors crowded into a small group of artificial intelligence and semiconductor giants.

The rally has been strikingly narrow. Rather than broad-based corporate strength, gains have been powered by a handful of mega-cap companies, masking weaker momentum across the rest of the market.

In the US, the technology sector contributed nearly 80 per cent of the S&P 500’s estimated 15.1 per cent year-on-year earnings growth in the first quarter. The market has effectively split in two: the Magnificent Seven—Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia and Tesla—and the remaining 493 stocks.

The appetite of investors for AI appears to be far from its peak. Space exploration firm SpaceX is preparing for what could be the largest initial public offering in history, while large language model (LLM) pioneers OpenAI and Anthropic are planning to go public by the end of 2026 or early 2027.

China’s markets are moving in a similar direction but with a different underlying rhythm. In the Chinese mainland A-share market, an AI hardware rally has rotated through computing power, optical modules, domestic chips and humanoid robots. In a bid to foster innovation, regulators overhauled listing standards for the ChiNext board in April, opening the door to unprofitable hard-tech firms.

Meanwhile, Hong Kong has become a launchpad for AI startups, pushing fundraising to a five-year high in the first quarter. The enthusiasm has spilled into the primary market, with Chinese venture capital and private equity funding surging past 400 billion yuan (US$59 billion) in the first quarter alone.

Yet beneath this coordinated capital rush, a critical debate is emerging: Is thi...