The stock market had a great three months. The S&P 500—a measure of 500 large U.S. companies—rose 15% in the second quarter of 2026, its best quarter in six years, according to Barron's and Kiplinger.

But here's the catch: two companies did almost all of the heavy lifting. SanDisk gained 258%, and Micron Technology shot up 241%, per Morningstar. Both make memory chips—the hardware that powers artificial intelligence systems. When a stock shoots up by that much in just three months, it typically means the entire market view of that company has shifted. It's not a gradual climb; it's a wholesale repricing.

Smaller Stocks Also Rose Fast

The rally spread beyond just the biggest companies. Smaller stocks gained even more. The Russell 2000 index—which tracks smaller U.S. firms—rose 21.5%, and the tiniest companies gained 25.6%, according to Royce Investments. That pattern can mean either that investors felt brave enough to buy riskier stocks, or that short-sellers—people betting on prices falling—were forced to buy to cover their losses.

Meanwhile, mutual funds that own U.S. stocks returned 10.1%, according to The Wall Street Journal. That's five percentage points less than the index itself. Why? Because funds hold cash for safety and many didn't own those two mega-gaining stocks. Year-to-date, those funds were up just 3.8%—rough first three months of the year, followed by a strong comeback in Q2.

Company Profits Are Expected to Rise Too

The price jumps aren't pure speculation. S&P 500 companies are now expected to earn 23.1% more in Q2 2026 than they did a year ago, up from a 18.8% expectation at the start of the quarter, per FactSet data cited by Nasdaq.com. That's a big upward shift in what traders think profits will be—and importantly, it happened before most companies actually reported their real numbers.

That timing matters. Expectations can shift fast, but when they do, the actual results need to match. If companies can't deliver on the new, higher expectations, stock prices often fall sharply once earnings season arrives. Investors betting that the 15% rally will stick around are counting on companies delivering strong enough results to justify it.

Worth noting: two stocks can't fairly be called a broad rally. SanDisk and Micron, even at typical index weight, could alone account for several percentage points of the S&P 500's gain. The real story is a bet on AI infrastructure demand, not a genuine rally across all stocks.