AI-fueled equity rally looks increasingly extended, Barclays warns in Stock News 06/06/2026 The AI-driven rally in semiconductor and technology stocks is showing signs of exhaustion, Barclays strategists warn, flagging a combination of stretched positioning, rising equity supply, and a busy macro calendar as potential triggers for a pullback. The MSCI World Semiconductors index has surged roughly 50% over the past two months, the second-highest two-month reading since November 2001. Strategists said fatigue is becoming visible and that support from fast money and CTA positioning, an important driver of the rally, may be losing steam given how elevated levels have become. A wave of large IPOs and capital raises in the technology space will also absorb liquidity in the weeks ahead, strategists led by Emmanuel Cau said. On the macro front, Kevin Warsh is set to chair the Federal Reserve for the first time at the June 17 FOMC meeting, at a moment when strong U.S. activity data and elevated oil prices are pointing to inflationary pressure. Barclays expects the Fed to hold for now, but acknowledges a more hawkish tilt as a possibility. In Europe, they see the European Central Bank (ECB) as more likely to proceed with a June rate increase despite concerns about tightening into a weakening economy. “The combination of frothy technicals and a catalyst-heavy June suggests that the chances of a tactical pullback, especially in the narrow momentum space, cannot be dismissed,” the strategists wrote, adding that with equity and bond volatility near their lows, it feels wise for investors to have hedges in place ahead of what is historically a tricky summer period. That said, the team remains broadly constructive on equities given earnings resilience and what it sees as a durable investment supercycle. The froth, the strategists noted, is narrowly concentrated in U.S. and Asian indices, while European indices have largely failed to reclaim their pre-conflict highs, and China and I