1. Nasdaq remains under pressure despite strong results.

Lam Research turned AI-fueled chip demand into record quarterly revenue, profit, and earnings. Traders celebrated by knocking the stock down 6.5%.
The problem was the price investors had already paid for perfection.
Meta also reported record third-quarter revenue and the company lifted its capital-spending range to a minimum of $135B.

Below: Intensive AI buildout keeps the free cash flows under pressure.

2. AI capex angst.

Morgan Stanley has upped its estimate to $1.6 trillion in total 2027 capex.

3. How cheap/expensive is the S&P according to the PEG ratio?

The PEG ratio is the forward P/E relative to the 5 year expected earnings growth.
If this P/E is less than the growth rate, then it is considered cheap.

By that definition, the S&P is a screaming buy…

Either the 5-year expected earnings growth is too optimistic or a bull market is developing under the surface of the S&P 500?

4. EssilorLuxottica shares up by 15%.

The third quarter results demonstrated EssilorLuxottica’s resilience, with organic sales growth coming in above estimates
“EL is a structural share taker/prime consolidator in a steadily growing optical market, but also a strong innovator from MedTech (Stellest) to Digital (Ray-Ban Meta) and Care (Nuance, Oculomics).”
We see a “highly compelling risk/reward into a quality growth compounder trading at an all-time low valuation”

5. BCA says “Buy Europe”.

“Europe is emerging as one of the most compelling investment opportunities globally, and investors should "buy Europe" as reforms, consolidation, and a valuation advantage over the United States support further upside”, according to BCA Research.

Meanwhile, trailing the US in artificial intelligence has not harmed European performance and will not hold it back going forward, BCA says.

To capitalise on the trend, BCA Research recommends buying European banks, telecoms, utilities, and industrials, while remaining structurally bullish on the euro against the US dollar.

Below: Lower tech exposure helps the Stoxx600

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