Why So Bullish? Markets Cling to Iran Hopes | Prof G Markets
Stock markets surged nearly 7% over two days on hopes the Iran conflict may be winding down, yet President Trump's signals remain contradictory. Tech stocks that fell 30–40% are now trading at their lowest multiples since 2022, while energy stocks posted their second-best quarter since 1989. Meanwhile, OpenAI just closed the largest funding round in startup history at an $852 billion valuation, yet burns cash and remains unprofitable. Are investors rationally pricing in peace, or clinging to hope while uncertainty reigns?
Puntos clave
Technology stocks now trade below 20 times earnings with accelerating growth — the lowest multiple since 2022 — creating a potentially attractive entry point for long-term investors despite recent volatility.
Energy stocks surged in Q1 with their second-best quarter since 1989, but the Baker Hughes rig count has not increased as it did during the 2022 Ukraine crisis, suggesting supply constraints may persist even if conflict eases.
OpenAI raised $122 billion at an $852 billion valuation — the largest startup round ever — yet generates only $2 billion per month in revenue, remains unprofitable, and faces skepticism in secondary markets where $600 million in shares failed to find buyers.
The administration's pattern of dismantling existing structures without viable replacements — from the demolished White House East Wing to tariffs struck down by the Supreme Court — creates sustained uncertainty that may undermine any rally built on ceasefire optimism.
Financials and industrials offer attractive valuations as the yield curve steepens and the market rotates away from concentrated leadership in mega-cap tech toward cyclical sectors with hard assets and cash flow generation.
En resumen
Markets are rallying on optimism that the Iran conflict will end quickly, compressing tech valuations to generationally attractive levels — but the pattern of «break now, fix later» policies leaves investors vulnerable to whiplash if geopolitical realities don't cooperate.
Markets Rally on Iran Peace Signals
Stocks surged 7% in two days on ceasefire hopes despite mixed signals from Trump.
The S&P 500 surged nearly 3% Tuesday and extended gains Wednesday as investors bet the Iran conflict may be winding down. President Trump said Iran's president requested a ceasefire, but the US will only consider it when the Strait of Hormuz is «free, open, and clear». That statement came just one day after Trump told aides he'd be open to ending the war even if the strait remains closed. The contradiction underscores the uncertainty investors face, yet markets have chosen optimism.
Technology stocks, which make up the largest sector in the S&P 500, now trade below 20 times earnings with accelerating earnings growth — the lowest multiple since 2022. The selloff that began weeks before the Iran crisis has compressed valuations to levels that may represent generational buying opportunities, according to John Mowrey of NFJ Investment Group. Yet the rally remains fragile, built on the assumption that geopolitical risk will dissipate quickly.
Energy stocks, by contrast, posted their second-best quarter since 1989 as Brent crude briefly crossed $100 per barrel. The sector benefited from both historically cheap valuations and the exogenous oil shock. Yet the Baker Hughes rig count — which surged during the 2022 Ukraine crisis — has not moved higher this time, suggesting supply constraints may persist even if conflict eases.
The Fed, Inflation, and Credit Concerns
Valuation Dislocations in Tech and Memory
Extreme earnings growth meets extreme skepticism, creating pricing anomalies.
Where to Find Value Now
Financials and industrials offer attractive entry points as the market broadens.
John Mowrey on Market Psychology
Equity prices force leadership's hand, just as they did with Zuckerberg and tariffs.
“The playbook is what happened with the tariffs. He drew a hard line and the market ultimately forced his hand. It's not unlike when Mark Zuckerberg said we're going to rename the company Meta, we're gonna do the metaverse. And then the market took the stock down 67%. He said, «Whoops, it's the year of efficiency.» So, the market ultimately dictates how leadership has to respond.”
OpenAI's $122 Billion Round
Largest startup fundraise ever, yet profitability remains elusive and secondary markets cool.
OpenAI just closed a $122 billion funding round at an $852 billion valuation, making it the most valuable private company in history alongside SpaceX. SoftBank co-led the round with Andreessen Horowitz and Thrive Capital; Amazon, Nvidia, and Microsoft also participated. The company generates $2 billion in revenue per month, driven by its API business and Codex, yet remains unprofitable and continues to burn cash.
The round cements Sam Altman's status as the greatest fundraiser in Silicon Valley history, having raised over $200 billion for the company in roughly three years. Yet secondary markets tell a different story: Bloomberg reported that $600 million in OpenAI shares failed to find buyers, suggesting institutional appetite may be cooling even as primary rounds soar. OpenAI pushed back on the report, noting that secondary transactions involve layers of management fees and legal complexity that make them risky and unrepresentative of core valuation.
The strategic investors — Amazon, Nvidia, SoftBank — bring more than just capital. A significant portion of their investment is likely contingent on deeper product partnerships, cloud infrastructure commitments, and hardware deals, creating what Alex Heath calls «circular motion» in the funding dynamics. Whether that translates to sustainable profitability remains an open question.
The Public Market Challenge
Quarterly earnings will be brutal for companies adding billions in ARR monthly.
The Public Market Challenge
Anthropic added $6 billion in ARR in February alone — an unprecedented leap tied to new model releases. OpenAI is preparing to release its next large model, internally called «Spud,» and expects coding capabilities to generalize to all knowledge work within 6–9 months. How do you narrate that in quarterly earnings? «Stock go up and stock go down rapidly,» as Alex Heath put it. The whims of public markets will be extraordinarily difficult to navigate for companies experiencing step-function shifts in capability and revenue every few months.
Break Now, Fix Later
Trump's pattern: demolish existing systems, promise replacements, then move on without building.
Demolish What Exists The 123-year-old White House East Wing was torn down in October without review or approval. It remains in ruins with no approved plan to rebuild.
Promise Something Better A $400 million ballroom was announced to replace the East Wing. Trump claimed authority to build without congressional approval, positioning the project as grander and more beautiful.
Hit Constitutional or Practical Limits A federal judge ruled Trump does not own the White House and has no statutory authority to build without Congress. The ballroom is now on indefinite hold.
Move On Without Fixing The same pattern appears in Iran (massive bombing, no regime change, now seeking ceasefire), tariffs (global chaos, Supreme Court strike-down, refunds only for businesses), and DOGE (300,000 federal workers fired, agency dissolved, deficit increased by $4 trillion).
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