The most striking anomaly in global markets today is not the violence in the Middle East or the price of Brent crude above $100 a barrel. It is the fact that Wall Street’s main indices — the Dow Jones, the Nasdaq and the S&P 500 — have not only shrugged off these headwinds but have climbed to all-time highs. In April alone, the three benchmarks posted robust gains of more than 7, 15 and 10 per cent respectively, and the rally has continued into May. This behaviour directly contradicts the conventional wisdom that a world at war and under energy shock must be a high-risk environment for equities. Yet the markets are sending a different signal, one that demands a more nuanced reading of the forces at work.

Viewed from Tehran, this disconnect appears bewildering at first. Iranian analysts note that markets do not simply mirror the news; instead, they are steered by technological momentum, soaring corporate profits, and behavioural mechanisms such as fear of missing out and algorithmic trading. The United States’ comparative energy advantage, they argue, has also reduced its vulnerability to oil-price spikes, allowing investors to look past the geopolitical noise. From São Paulo, Brazilian commentators echo this observation, pointing out that the rally has been remarkably resilient even as the conflict in Gaza shows no sign of resolution. The question is whether this optimism is justified or whether it has become detached from economic reality.

From Tel Aviv and Beirut, warnings are growing louder. Michael Burry, the investor immortalised in “The Big Short”, has drawn explicit parallels between today’s fixation on artificial intelligence and the final months of the dot-com bubble of 1999-2000. In a recent post, he observed that stocks no longer react meaningfully to employment data or consumer sentiment; they rise or fall on a two-letter thesis — AI — that everyone believes they understand. “Feels like the last months of the 1999-2000 bubble,” he wrote. Meanwhile, from Beirut, Warren Buffett’s characterisation of the financial markets as a “casino” has resonated widely. He points out that any company merely announcing an intention to enter the AI space sees its shares surge to price-to-earnings ratios of 90 or even 100 times — implying an investor would need a century to recoup their outlay through earnings. Both men see a speculative bubble inflating in the technology sector.

Yet the rally is not entirely irrational; underlying factors provide some ballast. The US economy continues to grow at around 2 per cent, and the earnings of the largest technology firms remain robust. The surge in AI-related spending and infrastructure is genuine, and it is reshaping productivity expectations across industries. Algorithmic trading and retail investor enthusiasm, amplified by social media and low-cost brokerage platforms, have created a self-reinforcing cycle. The risk, however, is that this cycle has become detached from valuation fundamentals. As one seasoned observer in the Gulf put it, the market is pricing in a perfect AI revolution while ignoring the possibility of a sudden correction.

Looking forward, the critical question is whether the current exuberance reflects a genuine structural shift or a bubble destined to burst. The dot-com analogy is imperfect — today’s AI giants generate real revenues and profits, unlike many of their late-1990s predecessors. But the valuation multiples are reminiscent of that era, and the narrowness of the rally, concentrated in a handful of mega-cap stocks, echoes the concentration risk that preceded the 2000 crash. A correction, if it comes, could be “breathtaking”, in Burry’s words. For global investors, the lesson may be that markets can remain irrational longer than geopolitics can remain tense — but not indefinitely.