Who cares about war, oil prices, interest rates or a possible AI bubble? Investors apparently do not — for now at least — sending stocks back to record highs.

Why it matters: High stock prices are critical to keeping funds flowing to the AI buildout.

• A significant erosion of investors' confidence in stocks would be a big risk to the AI flywheel of financial flows, capital expenditures and industrial activity driving the U.S. economy.

Catch up quick: Some analysts and investors had worried that the markets were beginning to deflate, as the S&P 500 failed to advance in June or July.

• Previously high-flying chip stocks hit an air pocket in early June.
• The slump then spread to hyperscalers, with the Mag 7 stocks becoming the Lag 7.

The latest: In the last four sessions, however, stocks have jumped almost 6%, led by massive gains from some of those same tech giants after Microsoft, Amazon and Alphabet each reported their quarterly results.

• The S&P 500 rose 1.8% yesterday, notching a new all-time closing high of 7736.52.
• Tech shares led the way yesterday, as retail favorite Palantir Technologies soared 29.5% after its second-quarter results showed strong sales of its AI software platform to corporate clients.
• Palantir's ability to profitably sell AI services appeared to help reinvigorate the AI trade, with semiconductor stocks and makers of other IT hardware that data centers need jumping.
• American producers of components called transceivers — used to connect fiber optic cables that carry data — also rose after reports that the Trump administration was considering banning similar products from Chinese competitors on security grounds.

Context: The revival of tech momentum adds to the strength of so-called "cyclical" sectors of the stock market — such as industrial companies, financial firms and energy stocks — that have largely kept the S&P 500 from falling too much throughout the recent soft patch.

• Energy shares — the benchmark index's biggest riser so far this year, up more than 30% — have of course been lifted by the Iran-related surge in oil prices.
• But industrial stocks have also risen amid growing proof that cash from the AI boom — driven by an expectation of almost $800 billion of capital expenditures by hyperscalers this year, according to FactSet data — is working its way deep into the industrial tissue of the U.S. economy.
• The S&P 500 industrials are up 20% year to date. If there at year end, it would be the best performance for the industrial sector since 2019.

The big picture: Indeed, the economy is looking hot by a number of measures, from surging capital goods orders to expanding manufacturing activity to growing demand for bank loans from bigger companies.

• And corporate profits look, technically speaking, nutso high.

Caveat: You often hear Wall Street analysts describe this phenomenon as a "broadening out" of the AI boom, which has a nice, soothing ring to it.

• Doesn't "broadening out" sound sort of like the "broad diversification" investors are supposed to seek out for market safety?

Yes, but: With AI now driving results at companies well beyond the tech sector, a skeptic might say that the market is actually more concentrated, rather than diversified, in terms of risk.

• In other words, more and more of the U.S. economy seems to be reliant on this one gigantic gravy train to keep chugging. So far, it has.

The bottom line: The AI boom continues to roll, with more of the economy exposed to both the upside and the risk associated with one of the largest investment booms in American history.

Traders and bankers are set to see big bonus increases this year, significantly outpacing other sectors in finance, per a new report out this morning.

Why it matters: A booming stock market, the AI investment surge and a pickup in dealmaking are turning 2026 into "the year of the bank," finds the analysis from compensation consulting firm Johnson Associates.

• You can chalk it up to the resilience of the U.S. economy, the firm's president Alan Johnson tells Axios.

Zoom in: Bankers working in equity sales and trading are projected to see bonuses rise between 20%-30% or more, the biggest increases in the finance industry, according to the projections.

• Advisory bankers, including M&A dealmakers, could see increases of 15%-20%.
• Overall bonuses in investment and commercial banking are projected to rise 10%-15%+.

Friction point: There's a catch. Typically with business booming, you'd see a surge in hiring. AI is changing things.

• "Usually people hire when things are really good, and they're not really doing that," Johnson says. AI and technology are a big part of it, he says.
• It hasn't led to layoffs, thanks to the surge in business this year. But, firms "don't need to hire."

How it works: The projections are based on first-half financials at 20 traditional asset management firms and 15 major investment and commercial banks, as well as the firm's conversations with clients in the industry.

Zoom out: Even with a war and rising bond yields, dealmaking and trading raged on in the first half of the year.

• "There hasn't been an event to slow things down," Johnson says.
• The roller coaster of volatility in the market — witness the recent rise and fall and rise in chip stocks — is also driving more trading.

By the numbers: Investment banking fees overall rose 46%, to $12.9 billion in the second quarter, compared with the quarter a year ago, according to a separate analysis of fees at the five big U.S. banks published by S&P Global Market Intelligence yesterday.

• Equity underwriting fees rose an astonishing 87% from last year at Goldman Sachs, JPMorgan Chase, Morgan Stanley, Bank of America and Citigroup.

The other side: Those working in the private markets are lagging behind: Bonuses are projected to be flat for those in real estate and at small private equity firms and venture capital outlets.

• At private credit companies — having a notoriously rough year — bonus growth is projected to be flat to negative 10%.
• Private markets have led the pack for more than a decade. The reversal this year is a "seismic change," Johnson says.

The bottom line: Bonuses are up, but the vibes might be less bubbly as AI roils finance.