1. AI earnings are broadening beyond AI enablers.

Earnings momentum remains strong among select “enablers”, but is increasingly extending to “adopters” as AI benefits begin to translate into company fundamentals.
Morgan Stanley remains upbeat about the boom, estimating another 50% increase in overall AI investment spending in 2027. But it also said the rising cost of capital would affect more selective and highly leveraged parts of the AI network, and more volatility may ensue.
"As the AI capital cycle matures, credit quality, collateral, and structure will matter more, not less," it said. "The capital will be there, but increasingly on different terms for different borrowers."
Below: Adopters see a forward earnings boost

2. Morningstar named Ark innovation ETF the number one for shareholder wealth destruction.

Kathie Wood has struggled in her tech-heavy fund, Ark Innovation ETF, in the past five years. It has underperformed a Nasdaq-100 index ETF by more than 130 percent!

“Investing should be more like watching paint dry or watching grass grow,” said Nobel Prize-winning economist Paul Samuelson. “If you want excitement, go to Las Vegas.”

3. Healthcare stocks are signalling a rotation out of tech.

For the past few years, healthcare has been in the market’s bargain bin, largely due to politics and the AI trade. Drug-pricing pressure under both Presidents Biden and Trump, plus surging medical costs for insurers, left investors skittish.
As investors grow wary of the tech sector, a premium for steadier, less cyclical earnings could have legs.
There is no knowing when the music will stop for the AI trade. Investors who hid out in healthcare in early 2006 lagged behind the market for nearly two years afterward. But during the financial crisis, the sector fell far less, and it kept outperforming for a decade. The industries that had led the boom took years to recover.

4. A large gap is opening up between earnings expectations and price relative for CAC40.

“Given that 76% of CAC40 exposure is from abroad, and given that PMIs relative will hold up better outside France, this gap represents an opportunity.”
Source: JPMorgan

5. Fade the Musk headlines…We still like the telco sector.

The Starlink satellite mobile disruption story will take many years and gigantic capital to play out and, even with the addition to SpaceX's spectrum portfolio, the company won't have enough spectrum to serve as a viable standalone competitor to the “US Big 3” ie AT&T, T-Mobile, and Verizon.
The Big 3 Telcos have dense terrestrial networks, each built with a combination of hundreds of thousands of small cells and macro cell sites in order to provide coverage and capacity in densely populated areas.
“80% of the U.S. population resides in urban areas, where high population density and physical obstructions such as buildings favor dense terrestrial networks over Satellite.
SpaceX would need to make significant additional investments in terrestrial infrastructure, including small cells and macro cells, to supplement Starlink satellites due to the physical limitations associated with transmitting signals to/from satellites.”

Yesterday, Orange published strong results and lifted its 2026 core profit growth target buoyed by growth in Africa, Poland and Spain, and said satellite connectivity would reinforce rather than undercut its networks.

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