AMZNAmazonBullishAmazonAAPLAppleBullishAppleGOOGLAlphabetBullishAlphabetMETABullishMSFTMicrosoftBullishMicrosoftSPYS&P 500NeutralS&P 500

Yesterday on

So much about bubble. From Citadel "Corporate earnings have continued to exceed expectations despite entering Q3 reporting season against one of the highest bars in more than a decade. Consensus expectations called for 27% YoY S&P 500 EPS growth, with estimates having been revised higher heading into earnings. Through the first 304 reporters, representing 65% of index weight, 83% of companies have beaten EPS estimates, compared with a historical average of ~75%. This ranks among the ten strongest reporting seasons at a comparable stage since 2005." Still, the fear is notable and despite strong earnings, investors not been willing to reward companies for the results. "The index-weighted average earnings-day move has been −1.2%, the 2nd worst in 87 reporting seasons since 2005." The last part is the most unusual one: "Since June 30, forward EPS estimates have risen 32% for Memory, 31% for AI Infrastructure, and 30% for Semiconductors. Over the same period, forward valuation multiples have contracted 50%, 36% and 35%, respectively. Nearly every company in these groups has seen earnings expectations improve, yet all 20 S&P 500 semiconductor constituents have experienced multiple compression." This selling has been overdone, really, really overdone. Despite all the macro (oil, bonds, wars) nothing changed in the AI infrastructure. If anything it became stronger. This does not mean "buy every dip". We have to be a lot more selective. Way more. I believe hyperscalers will be a no brainer investment for the next 3-5 years. $GOOGL $AAPL $META $AMZN $MSFT After hyperscalers we will see improved strength in software and other industries which will rely on AI, or which had the best AI adoption.