Unprofitable stocks and games with AI are among the winners of the year.

The riskiest market segments have seen notable strength in technology equities this year, which some cynics claim might prompt a swift turnaround.

Businesses that make electric cars, meme stocks, cryptocurrency companies, and companies that develop money-losing software all saw gains as the Nasdaq 100 increased by 16%.

The rally challenged the tepid earnings of the largest companies.

The phenomenon is that bond yields are declining from recent highs as concerns about inflation abate, and financial conditions are currently more stable than they were around the end of 2022.

The stock is experiencing a “junk rally,” according to Jim Smigel, chief investment officer at SEI Investments Co., when the worst-performing equities rise in value. Because there are no basic driving forces behind it, he said, “This is enormous speculation, and it will burn up rapidly.”

According to Citigroup Inc., market positioning is supporting this opinion as bearish bets on the Nasdaq 100 are increasing.

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