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31 Jul 2026

Warning signs are flashing for the AI giants

Every major market boom has been driven by a handful of companies that for a while, successfully captured the imagination of investors. Railroad stocks accounted for about 63% of the US market in the 1880s. Japanese companies made up 44% of the MSCI World Index at the peak of Japan's asset bubble in 1989, while technology and telecom stocks reached 41% of the S&P 500 during the dot-com boom in 2000.

It's now South Korea's turn in the sun (or bubble). By mid-June, its benchmark index KOSPI had nearly doubled for the year, led by memory chipmakers Samsung Electronics and SK Hynix. They accounted for over half of KOSPI’s market capitalization and more than 70% of the gains.

But over the past month, KOSPI has taken a tumble as investors question the massive AI spending.

The same questions are seeping into the US. As investors turn into worrywarts, Tesla lost more than 12% after its latest earnings. IBM erased about a quarter of its market value in a single day. Netflix also saw a sharp post-earnings drop despite adding subscribers and raising its outlook.

The AI spending spree is unprecedented. Hyperscalers are expected to spend nearly $700 billion on AI infrastructure this year, with Microsoft and Oracle alone accounting for over $230 billion. And the growth guidance for these businesses is heavily dependent on a few companies. OpenAI for example, makes up roughly 45% of Microsoft's commercial backlog, and more than half of Oracle's backlog through the Stargate project.

With open-source Chinese models rivalling American ones in capabilities, investors are looking for stronger guidance, and clearer evidence that the billions of dollars being spent on AI will eventually produce bigger profits.

AI rally drives S&P 500 concentration risk higher

Bank of America says today's AI Big 10 make up roughly 40% of the S&P 500. The group includes Nvidia, Microsoft, Alphabet, Amazon, Meta, Apple, Tesla, Broadcom, AMD and Micron.

The Nasdaq Composite surged 21.4% during Q2 2026, its strongest quarterly gain since the post-pandemic rally of 2020. Chipmakers, memory suppliers and companies building AI infrastructure accounted for much of that advance. Even Elon Musk's SpaceX IPO added to the excitement around technology stocks.

However, as earnings season started in July, the index has plunged more than 10% over the past month, entering correction territory. The volatility these stocks are seeing are more suited to microcaps than index bigwigs.

Alphabet's Q2 earnings showed how high expectations have become. Revenue continued to grow, but investors were more focused on its plan to spend up to $205 billion on AI infrastructure this year. Russ Mould, investment director at AJ Bell, said, “Alphabet is spending hundreds of billions of dollars to stay ahead in the AI race. But investors are still unsure whether those investments will generate enough returns.”

Chinese AI companies such as Moonshot AI and DeepSeek are hitting growth plans for American AI businesses, by making advanced AI much cheaper to run. Moonshot AI's Kimi K3 charges $15 per million output tokens, compared with $50 for Anthropic's Claude Fable 5. Microsoft has reportedly started testing the Kimi model for some workloads as it looks to reduce inference costs by up to 70%.

Tesla more than doubled its capital spending to $5.8 billion as it invested heavily in AI, robotaxis and humanoid robots. The spending pushed free cash flow to negative $1.1 billion for the first time in more than two years, while automotive gross margin also missed expectations. Tesla is facing stiff competition from Chinese rivals, with BYD selling more battery electric vehicles than Tesla last year. Xiaomi, XPeng and other Chinese automakers are launching newer models at lower prices.

Superstar investors see US stock market in bubble territory

The S&P 500's forward price-to-earnings (PE) ratio stood at 22.2, according to LSEG Datastream. That's more than 40% above its 40-year average of 15.8.

The Buffett Indicator has climbed to around 236%, well above the 200% level that Warren Buffett once described as investors “playing with fire.” The ratio crossed 190% in late 2021 before the market entered a bear market the following year.

Berkshire Hathaway ended Q1 2026 with a record $397.4 billion in cash and Treasury bills, the largest cash reserve in the company's history. Even so, Buffett and Greg Abel have continued adding to Berkshire's Alphabet stake, with Buffett believing the stock could outperform 90-95% of Wall Street's picks.

The Shiller CAPE ratio, which measures valuations using average earnings over the past 10 years, has climbed above 40. The last time it reached those levels was during the dot-com bubble, when it eventually peaked at 44.2.

Jeremy Grantham, known for calling the dot-com bust and the 2008 financial crisis, pointed out a trend where leaders of the previous bull market start to underperform while the overall market continues to rise. He believes the US market has entered a “superbubble” and warns stocks could fall by as much as 70%, although he has made similar warnings well before previous market corrections.

“By pretty much every historical metric, the market's valuation is rich,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. The question investors are grappling with is whether those valuations are justified.

The Baseline US

16 Jul 2026, 05:35PM

FIFA is rolling in money this World Cup

Soccer and fútbol fans everywhere are waiting to see if Argentina can retain the FIFA World Cup trophy, or if Spain and Lamine Yamal will clean out the defending champions and take the cup home for the first time in over a decade. As the tournament wraps up, total attendance has already crossed 6 million.

When FIFA first came to the US in 1994, it drew 3.6 million spectators, setting a record that stood for more than three decades. That record broke midway through this year's tournament on June 25. In 1994, FIFA earned most of its money from television rights. Today, it monetizes almost everything.

Sponsorships are expected to bring in $3-4 billion in revenue, at least 35% more than the last season in Qatar. FIFA has also adopted dynamic ticket pricing for the first time amid much backlash, with some seats costing up to 10X more than they did in Qatar. People who attended FIFA in ‘94 say that back then, the uncertainty was whether people would show up. The question this time around has been whether they can afford to.

Even after the final match is played, FIFA isn’t done making money from it. After the final whistle, it plans to sell fragments of the pitch used for the July 19 final as “memorabilia,” with prices (for a product that is basically grass and mud) starting at $450. FIFA expects to gain more than $11 million from the sale, seemingly confident that they will find enough pushovers clicking 'buy'.

It's FIFA’s biggest payday yet

Overall, FIFA expects to generate $8.9 billion from this World Cup tournament, accounting for nearly 70% of its record $13 billion revenue target for the 2023-26 cycle. When current FIFA President Gianni Infantino campaigned for the FIFA presidency in 2016, he had promised to quadruple the organisation's revenue. He saw this growth coming from changes in how FIFA runs the tournament.

For most of the World Cup's history, local organizing committees managed the event, absorbed the bulk of the costs and also shared in the commercial upside. This time, FIFA is effectively acting as the organizer, and is less eager to share, instead working directly with host cities while taking control of almost every major revenue stream, including media rights, sponsorships, ticketing, hospitality and merchandise.

Host cities, meanwhile, are left footing much of the bill. They pay for transportation, policing, security, airports, FIFA Fan Fest sites and even the vehicles used during the tournament.

When asked what cities receive in return, a FIFA executive said, “Hosting this tournament will put your city on the map.”

That promise of 'exposure' for the host cities sounds pretty vaporous, compared to cold hard cash. New York City Comptroller Mark Levine estimates that even if FIFA's rosy projections of 1.2 million regional visitors materialize, the city would collect only about $55 million in additional tax revenue while spending roughly $70 million on policing, emergency management and support for small businesses. Across all 11 US host cities, the combined loss could exceed $250 million.

To cover these costs, some agencies have passed the bill directly to fans. Those travelling to the final in New Jersey face a $150 train fare, nearly 12 times the regular price. NJ Transit CEO Kris Kolluri defended the hike, saying, "This isn't price gouging. We are literally trying to recoup our costs."

There has also been speculation that FIFA has been shifting unsold tickets to secondary marketplaces, according to S&P Global’s Johnson. “It’s creating a sense of artificial scarcity, which is pushing fans to pay a little bit higher prices in both the primary and secondary markets,” he said.

FIFA also benefits from the resale market. Its official ticket exchange charges a 15% fee to both buyers and sellers, creating yet another revenue stream from every ticket that changes hands.

US companies benefit from higher engagement

FIFA expects this year’s World Cup to reach 6 billion in global engagements across TV, streaming and digital platforms for the entire tournament, 20% higher than the previous edition. The US’ match against Bosnia and Herzegovina drew over 36 million viewers across Fox and Comcast’s Telemundo, setting a new US television record for a soccer broadcast.

The massive audience has given Fox an unexpected windfall: they have been filling FIFA’s mandatory six-minute hydration breaks with commercials. Fox is likely to generate at least $250 million in ad revenue. Higher projections go up to $600 million, potentially eclipsing the $485 million it paid for the tournament's US media rights.

Given the windfall this year, broadcasters could pay roughly twice as much for the 2030 US media rights, with bidding expected to start at $1 billion. Netflix, Disney, Apple and Amazon are all circling to seize this opportunity.

Over 6.2 million fans attended matches, with stadiums operating at near full capacity. While taking in the matches, these crowds downed more than 5 million beers.

The Beer Institute noted that fans pushed local bar sales up by 15.4% across all tournament host cities. In Boston, a local taproom had to make an emergency beer run after Scottish fans wiped out four times the usual weekend supply of Sam Adams Boston Lager. "We've never seen anything like it," said Billy DeCain of the Sam Adams taproom.

Jefferies analysts had estimated a 568 million-liter boost to global beer consumption during the June-July period due to the tournament. Anheuser-Busch InBev’s CEO Michel Doukeris said, "FIFA tournaments have historically added 20 to 30 basis points to our annual global beer volumes," adding that the crowds fuel the company's sales in the second and third quarters.

Some brands have outsmarted FIFA's rules

FIFA operates a strict 'clean stadium' policy, stripping venues of any branding not tied to an official tournament sponsor. That left Levi's with little choice but to cover up its giant logo at its own San Francisco Bay Area Stadium. Levi's complied with the rule, with a twist. It posted a picture of the covered sign with a caption: "Welcome to the beautiful [redacted] stadium," turning FIFA's branding blackout into a wave of free publicity.

Levi’s CEO Michelle Gass said the campaign generated around one billion press impressions, making it the “most viewed, shared, and commented post in Levi's history.” The company has even printed limited-edition t-shirts featuring the redacted logo, letting fans wear the punchline.

Other non-sponsor brands joined the fun, with Heinz handing out blacked-out bottles of "Unofficial Stadium Ketchup" just outside stadiums. In Massachusetts, Procter & Gamble’s Gillette responded to its own stadium blackout by posting pictures of its logo covered in digital shaving foam.

On Sunday, one team will be crowned champion. But the bigger winners are FIFA and the companies that have managed to monetise almost every aspect of the tournament, including the grass.

The Baseline US

03 Jul 2026

The verdict is in: Did Trump's tariffs deliver on his promises?

Walk into a Walmart and pick up a laptop, a microwave oven, a t-shirt or a pair of sneakers: the odds are that it wasn't made in the US, even if it's an American brand. More than95% of the clothes and shoes Americans buy are imported, and most consumer electronics are manufactured abroad.

When Donald Trump returned to the White House, he promised to rewrite the rules of global trade. Tariffs, he said, would bring factories and jobs back to America, as well as shrink imports and the country’s trade deficit. He made these claims against all historical evidence of what tariffs do (spoiler alert: they don't bring lost jobs back).

As it turns out, the first full year of post-Trump trade data does not have good numbers for the President. US trade didn't fall. Instead, total goods and services traded in 2025rose more than 5% to $7.8 trillion, despite tariffs and geopolitical uncertainty. And the overall trade deficit narrowed just 0.2%. America changed where it imports from, much more than how much.

This week, the US chose not to renew the United States-Mexico-Canada Agreement (USMCA), opting instead for annual reviews. Killing a trade pact Trump once hailed as "the best agreement we've ever made," signals that the administration continues to be hostile to trade, so much so that even Trump's own trade deals are not safe from the axe.

Mexico and Canada held their positions as the top US trading partners in 2025, accounting for more than a quarter of total goods trade. The bigger changes happened further down the rankings, where China's share continued to shrink while Taiwan and Vietnam became more important to American imports.

America found new partners, who look just like the old partners

Ask most people which country the US imports the most goods from, and many will say China. While trade between the two countriesfell nearly 30% in 2025, the US still imports roughly three times more than what it exports to China.

Replacing China didn’t mean bringing production back to the US, as building new factories takes years. Many companies instead scaled up operations in countries such as Vietnam and India, where they already had factories, supplier networks and skilled workers. That helped Vietnam climb from eighth to fifth among America's largest trading partners as imports from Southeast Asia surged.

Some companies also re-routed goods through countries with lower US tariffs before shipping them to America. "Our data suggest there was substantial transshipment last year,"said Ebehi Iyoha, Assistant Professor at Harvard, noting that Chinese-owned manufacturers across Asia were well positioned to benefit.

In August last year, Southeast Asian countries, including Thailand and Vietnam, weresingled out by Washington for facilitating transshipment of Chinese goods. US monthly tradedeficits with Thailand have doubled over the past year and continue to widen. At the same time, Thailand's tradedeficit with China has also increased.

The trade deficit changed addresses

Reducing the trade deficit with China was one of Trump's biggest trade goals. By that measure, the policy has made progress, reducing the deficit by around 32%. The more important question, however, is whether America is importing less overall.

So far, the answer is no.

"It is still the case that the US is not self-sufficient in everything,"said Monica de Bolle, a senior fellow at the PIEE. "It may be able to export a lot, but it still imports way more than it exports."

As technology companies poured billions into AI infrastructure, US imports of advanced semiconductors and servers surged. Economists at the Minneapolis Fedestimate that, without the AI boom, the US goods trade deficit in 2025 would have been nearly $200 billion smaller.

Looking at goods alone, the US trade deficit increased. Even as imports shifted away from China, the US' goods trade deficit widened 2.1% to arecord $1.24 trillion in 2025. Strong services exports kept the overall trade deficit largely unchanged at $902 billion.

Factories haven't come back as quickly

Trump's "Make America Great Again" campaign promised to bring factories back to the US, create more manufacturing jobs and fill store shelves with products that said 'Made in the USA'.

But that golden age is looking elusive, as US manufacturersemployed 82,000 fewer workers in March 2026 than when Trump took office in January 2025. While the sector did add 11,000 jobs during the first quarter, it recovered only a small part of the previous year's losses.

Spending on new manufacturing facilities was also 20.5% lower over the same period, reversing part of the construction boom sparked by the Biden-eraCHIPS Act andInflation Reduction Act. Construction spending has fallen every month since Trump returned to office, suggesting companies are becoming more cautious about new factory investments. The manufactured goods trade deficit was 27.7%higher in Q1 2026 than it was two yearsearlier.

Who ends up paying the tariffs?

US courts struck down key parts of Trump's original tariff programme, forcing the administration to look for other legal options. The White House is now looking to expand Section 301, a trade law typically used against countries accused of unfair trade practices, by opening investigations into around 60 economies.

Many of today’s tariffs were imposed under Section 122, an emergency trade provision that expires later this month, unless the US replaces it with another legal measure.

Even if those tariffs expire, theBudget Lab at Yale estimates consumer prices would still rise 0.5–0.6%. That would reduce the average household's purchasing power by about $650–780 a year.

If legal maneuvering makes the tariffs permanent, prices could rise 0.8–1%, increasing that annual cost to $1,130–1,340. Lower-income households would be hit the hardest because they spend a larger share of their income on imported goods.

The next phase of Trump's trade strategy will be judged less by where America buys its goods and more by what happens at home: whether factories return, and if consumers can avoid higher prices.

The Baseline US

19 Jun 2026

Mega IPOs deliver a windfall for US investment banks

More people than usual are talking about the SpaceX IPO, because of its eye-watering valuations and the Elon Musk connection. Matt Stucky, Chief Portfolio Manager at Northwestern Mutual Wealth Management, says he has "never been asked more about an IPO" by clients and advisers.

Wall Street had a field day with the deal. The banks underwriting the IPO took home about $500 million in fees, despite settling on just 0.7% of the proceeds. That fee pool alone was about the same size as Goldman Sachs' equity underwriting revenue for the first quarter.

No wonder Goldman fought hard for the mandate. CEO David Solomon had apparently slid into Elon’s DMs on X around May, to discuss the SpaceX listing. Back in 2007, Solomon had won the Lululemon IPO deal by showing up to the pitch meeting dressed top to toe in Lululemon gear.

After a prolonged dry spell in the IPO market, this mega-listing has given bankers a win. IPO activity has been subdued since the 2021 boom; higher interest rates and economic uncertainty have kept many acquisitions and fundraising plans on hold.

But 2026 is already buzzing. Global M&A volumes have crossed $2.6 trillion this year. Companies are growing more confident about making long-term investments. Goldman Sachs investment banking co-head Matt McClure says that "CEOs and boards are taking a long-term strategic view" despite the uncertain macro environment.

The IPO market is reopening, led by AI

SpaceX has dominated the headlines, but bankers are also looking at the next wave of companies preparing to go public.

OpenAI and Anthropic have confidentially filed for IPOs, while several other AI companies are exploring public listings. Together, the known AI pipeline could raise more than $150 billion. That is roughly five times the amount typically raised through US IPOs in a normal post-pandemic year.

AI IPO Pipeline

Wall Street is seeing dollar signs beyond just IPO fees. The companies preparing to list are among the biggest spenders in technology. OpenAI has said it expects to spend about $600 billion on AI infrastructure by 2030, while AI companies across the industry are raising money for chips, data centres and acquisitions. Funding ambitions of this scale can create years of dealmaking opportunities for investment banks across the AI ecosystem.

Established tech players are also ramping up spending on AI infrastructure. Since 2025, firms like Alphabet, Amazon, Meta, and Oracle have already raised over $270 billion by selling investment-grade bonds.

Nvidia recently joined the AI fundraising wave, returning to the bond market for the first time since 2021 with a $25 billion offering. Investors have absorbed similar debt sales from technology giants, giving banks more opportunities to earn fees from bond offerings.

M&A activity spreads beyond AI

Bankers have spent the last few years talking about a recovery in dealmaking. But rising borrowing costs, market volatility and cautious corporate boards delayed that comeback.

The difference this year is that more deals are actually getting done. Global M&A deal values rose 27% in early 2026 and reached their highest level in five years. Technology remains a major driver, but activity is also picking up across healthcare, consumer businesses and industrial companies.

M&A Activity Chart

One deal drawing particular attention is the proposed buyout of Electronic Arts. JPMorgan is arranging roughly $20 billion in debt financing to help fund the acquisition. When a single transaction requires that much capital, the fee pool becomes huge for the banks involved.

The recovery is starting to extend beyond the largest and most closely watched deals. Recently, Evercore CEO John Weinberg stated that deal activity is broadening into the middle market.

Investors have become more willing to back new deals, but they haven't stopped scrutinizing them. Alex Robb of Ropes & Gray said there remains "robust appetite for new debt deals", though companies with weaker finances are still finding it harder to attract investors.

That became clear earlier this year in a financing deal linked to fantasy sports company PrizePicks. Banks expected investors to buy most of the debt tied to the transaction. But interest for the debt package came in below expectations, forcing the banks to hold a larger share of the debt themselves.

The house always wins

JPMorgan generated $2.9 billion in investment banking fees during the first quarter, up 32% from a year earlier. Goldman Sachs reported an even larger increase, with investment banking fees rising 48% to $2.8 billion.

Thanks to rising deal activity, shares of Goldman Sachs, Morgan Stanley and Citigroup have surged over 20% since the start of the year. Citigroup also outperformed its peers after President Donald Trump lauded the bank and its CEO, Jane Fraser, in a recent Truth Social post. This comes after a weak performance in its investment banking division over the past few quarters. However, Citigroup CFO Gonzalo Luchetti expects revenue from the investment banking business to grow in the mid-teens in Q2.

Goldman Sachs helped lead SpaceX's IPO, advised Dominion Energy on its $66.8 billion sale to NextEra Energy, and worked on more than $1 trillion worth of announced M&A transactions this year. JPMorgan remains one of the busiest players in the market, helping finance some of the largest buyouts currently under discussion.

The SpaceX deal offers a glimpse of why these mandates matter so much. Goldman Sachs and Morgan Stanley each walked away with roughly $100 million in fees, while Bank of America, Citigroup and JPMorgan Chase earned about $75 million each.

As long as companies keep raising capital, pursuing acquisitions and coming to market, the flow of fees continues. For investors, the larger question is whether the stock will perform after the deal is done.

Analysts at JPMorgan recommend buying Goldman Sachs and Morgan Stanley ahead of Q2 results next month. They argue that “markets may be underestimating how much recent IPOs, financing activity and trading volumes could boost their results.” The bankers are right now, making bank.

The Baseline US

05 Jun 2026

Bond markets force America to live with higher rates

Two weeks from now, Kevin Warsh will chair his first Federal Reserve meeting. With bond markets already signalling that interest rates are not coming down, the timing for the new Chairman couldn't be worse.

The US-Iran conflict has pushed gas prices above $5 a gallon in many states, bringing inflation fears back and driving the 30-year Treasury yield above 5% for the first time since 2007. Just a few months ago, Wall Street was pricing in several rate cuts this year. Now, the debate is whether the Fed’s next move will be another rate hike.

It wasn’t just oil and the US-Iran war that changed the story. The American economy has not slowed as expected, and this has weakened the push for a rate cut. Retail sales have repeatedly beaten forecasts. Delta Air Lines recently said that summer travel demand remains “quite healthy” despite concerns around consumer spending. The private sector is spending heavily as US tech companies scramble to buy chips, power capacity, and data center space as AI investments surge.

Trump picked Warsh in part because markets viewed him as more dovish on monetary policy. But despite Trump’s fondness for interest rate cuts, he insisted at Warsh’s swearing-in ceremony that the new chair is "free to do his own thing”. Traders are interpreting that as a signal that policy could remain tighter for longer.

Traders stop betting on Fed cuts

Analysts no longer believe inflation will cool enough to justify cuts anytime soon.

Before tensions in the Middle East escalated, inflation had fallen from its 2022 peak. Under normal circumstances, Treasury yields should have gradually fallen alongside it. Instead, the benchmark kept climbing as bond buyers grew concerned that the economy remained stronger than forecast.

The labor market still looks unusually resilient for an economy with financing premiums above 5%. Consumer spending is holding up better than anticipated. Employers are hiring. Even industries that analysts expected to weaken first, like travel and entertainment, are reporting solid demand.

Then came the artificial intelligence spending boom. Markets increasingly view this less like a software trend and more like an industrial expansion cycle. Microsoft, Amazon, Alphabet, and Meta are collectively spending hundreds of billions of dollars building data centers, securing power supply, and expanding computing infrastructure. That spending has impacts far beyond just Silicon Valley, in a construction, utilities, metals, and industrial equipment boom.

Bloomberg’s Joe Weisenthal recently wrote that the rising 10-year benchmark means “a whole range of borrowers will face steeper prices, from homebuyers to data center builders.”

For most of the post-2008 period, Wall Street spent its time worrying about weak growth, weak inflation, and weak demand. Now markets fear the opposite problem: an economy that may stay too strong to allow borrowing costs to fall.

America’s debt is looking expensive

For years, investors weren’t too worried about America’s debt burden because interest rates stayed near zero.

During the pandemic, the government borrowed trillions of dollars at extremely low levels. Now, as Treasury yields cross 5%, much of that debt now needs refinancing at far greater premiums. The Congressional Budget Office projects federal interest obligations to rise from 3.3% of gross domestic product in 2026 to 4.6% by 2036 as the government refinances older debt.

That would make interest payments larger than many major government programs, and eat into the government’s ability to push for new projects and initiatives.

Like compulsive borrowers, governments can also fall into debt traps. This rising rate environment can feed on itself. Swelling deficits force the government to issue more Treasuries. More Treasury supply pushes borrowing costs upward, which further bloats the deficit and forces the government to issue even more debt.

Jamie Dimon recently warned that rates could move “much higher” because fund managers are questioning how much government debt markets can absorb without demanding greater compensation.

Bond buyers are also becoming less confident that inflation will remain predictable over long periods. That uncertainty matters because buyers of 10-year and 30-year Treasuries increasingly want protection against the risk that inflation stays higher for longer than central banks expect.

Rising rates hurt consumer confidence

Bonds don’t have a hold on people's imagination compared to say, a Knicks game. It’s not going to dominate dinner-table conversations. But they are fundamental to some of the biggest financial decisions Americans make.

Millions of homeowners refinanced mortgages below 3% during the pandemic. Today, the 30-year mortgage average sits close to 7%. For many families, moving today means assuming monthly payments hundreds or even thousands of dollars larger than their current obligations.

So people have delayed moving, builders are slowing down projects, and higher rates are increasingly pricing new buyers out.

Existing home sales in the US are well below pre-pandemic levels, even though the broader economy continues to grow. “The housing market is stuck,” Redfin recently noted while describing how homeowners remain locked into older cheap mortgages.

The pressure spreads far beyond housing. Credit card interest rates remain near record highs. Auto loans have become significantly more expensive. Businesses now think more carefully before borrowing to expand or hire workers.

Consumer confidence has crashed as borrowing costs and inflation weigh on household finances. The University of Michigan’s Consumer Sentiment Index fell to 44.8 in May, marking the lowest reading ever recorded and reflecting growing concerns about the cost of living and future inflation.

The stock market has managed to absorb much of this pressure because profits from large technology companies are surging alongside artificial intelligence spending. Since early 2023, the S&P 500 has hit new records even as Treasury yields climbed relentlessly upward.

Historically, though, those two trends rarely coexist for long.

Once government bonds start offering 5% returns with relatively low risk, stocks are a lot less seductive. Investors become less willing to pay extreme valuations for stocks whose profits may arrive years into the future. That becomes especially relevant for expensive technology companies that have led much of the market rally.

For now, earnings growth continues to mask some of that pressure. But bond markets are flashing warning signs about the tightrope we are on.

The Baseline US

22 May 2026

US homebuyers waited out the frenzy, but there's no relief in sight

Are you planning to buy a home this year? After years of brutal bidding wars and record-low inventory, 2026 was supposed to be the year when most people could land a home, as supplies grew.

Unfortunately, the pain continues. Rising mortgage costs and economic uncertainty have created a different kind of housing slowdown.

Home improvement retailer Lowe's recently joined its rival Home Depot to highlight a squeeze in the US housing market. High oil prices are driving up shipping costs just as shopper confidence hit record lows. And 10-year treasury yields, a benchmark for mortgage rates, rose to hit a 16-month high on May 19.

The real estate market sure looks busy. New construction "hit its strongest level since December 2024” in March. But look closer, and the smiles are strained. Yes, construction activity rose 10.8%, but permits for future projects fell. Single-family permits dropped 3.8%, hitting their lowest level since August 2025. This matters because permits reveal what builders expect for the coming months.

Why has the mood darkened? One reason builders are getting nervous is that high borrowing costs are scaring off buyers. Lowe’s CEO Marvin Ellison said, “We are operating in a K-shaped economy where the higher-income consumers are spending on home upgrades, while the lower-income consumers are a little bit more uncertain.” Homes are sitting on the market a lot longer.

Tudor, classic, midcentury?: there are now plenty of homes, but few are buying

For the first time in years, the US housing market is loosening up. Listings are rising, open houses are not as crowded. But sellers are being forced to cut their prices, as the spring buying season struggles to gain momentum.

Sellers now outnumber buyers by roughly 43%, one of the biggest gaps in more than a decade. In a normal market, that would lead to a pickup in transactions as buyers get room to negotiate. But buyers are choosing to wait.

Affordability has become the biggest obstacle. Buyers who spent the last two years waiting out bidding wars expected this spring to offer relief. But the monthly cost of ownership feels out of reach for many households. Pending home sales, which track signed home contracts before deals officially close, fell 1.1% YoY in March 2026, making it one of the weakest spring selling seasons in years.

“The stage had been set for a good homebuying season,” Homes.com economist Brad Case said recently. “But being serious about buying a home doesn’t translate into actually buying it.”

Mortgage costs jump as US-Iran conflict rattles markets

The US war with Iran has shifted housing sentiment pretty quickly.

Rising oil prices and inflation fears have pushed mortgage rates sharply higher. The average 30-year fixed mortgage rate climbed from below 6% in late February to above 6.2% within weeks, according to Freddie Mac. At one point in April, rates briefly touched nearly 6.5%.

Even small moves in mortgage rates can dramatically change affordability for middle-income households. Buyers with carefully planned budgets are now priced out of homes due to higher rates. While some started searching for smaller homes, others delayed purchases entirely and chose to stay in rentals.

Nic Parés, a 37-year-old IT worker in Austin, said he and his wife had to reduce their budget by nearly $100,000 after borrowing costs jumped again. “There are properties that probably check all of our boxes that we’re now priced out of,” he said.

The pressure is especially severe for first-time buyers because nearly all of them rely on mortgages to purchase a home. Around 97% need financing, but smaller home loans have become harder to access. Banks earn far less from a $100,000 mortgage than from a much larger loan, even though the processing costs are almost identical. As a result, many lenders have stepped away from smaller-ticket lending.

So while affordable homes still exist in cities like Detroit, St. Louis, and Memphis, especially on older lots, many buyers cannot secure financing to purchase or repair them.

Homes are staying on the market for more days than last year

A typical US home now spends nearly two months on the market before finding a buyer. Back in early 2022, many homes barely lasted 30 days before getting snapped up. Now, even compared to last year, today’s market is noticeably slower.

Texas real estate analysts say the “correction underway is a normalization, not a collapse.” Inventory has nearly doubled from levels seen during the 2021-2022 housing boom.

Residents are starting to notice the difference too. One Austin homeowner described how dramatically the mood has changed in just a year: “A year ago, ‘For Sale’ signs turned into ‘Sold’ signs before the weekend was over.” Now, many of those 'For Sale' signs are looking a little worn out, as winter turns to spring and the houses are still on the market.

The Baseline US

30 Apr 2026

CEO exits surge as AI and activist boards shake up the C-suite

Most of the top companies in the US market have CEOs well into their 50s and 60s. Vast experience in navigating the industries they are in, have been key to their rise through the ranks.

But the advent of AI brings up a different concern: how good are these older people in embracing new tech? As AI becomes a competitive advantage, CEO turnover is rising, as the top brass struggles to stay relevant.

“If the person at the top can’t do it, they’ll find the next one,” says Georgetown University professor Jason Schloetzer, noting that there is growing assertiveness among boards and activist investors to push CEOs out. C-suite exits are reaching record levels. And pre-emptive firings seem to be catching on, as in many cases, companies are choosing to reset leadership even before the pressure shows up in earnings.

“There’s a sense of planning behind many of these transitions,” notes Ariane Marchis-Mouren, Senior Researcher at The Conference Board. The shift from reactive firings to deliberate succession is becoming clearer.

At Apple, Tim Cook is set to pass the CEO baton to an internal successor, John Ternus and move into a chairman role. Ternus has spent 25 years at the company, leading hardware across its core products. Reports suggest his first product roadmap will focus on the long-elusive foldable iPhone (a product that many competitors including Samsung have been selling for years) and a pipeline of AI-powered smart home devices and wearables.

Early 2026 has several top executives stepping down or retiring. Many of these reflect the challenge of keeping pace with rapid change. CEO chairs are well-cushioned in more ways than one, and as Satya Nadella puts it, “success can make people forget the habits that made them successful in the first place.”

New face for the next race

Tim Cook at Apple, Doug McMillon at Walmart, Shantanu Narayen at Adobe: these CEOs have all led their companies for over a decade.

During Adobe's March 12 update, Narayen noted it was his 100th earnings call as CEO, marking a tenure that saw revenue grow from under $1 billion to over $25 billion. Narayen helped move Adobe from a packaged software company to a cloud-first platform. But now, the winds of AI have been threatening to uproot some of Adobe's most iconic products, including Photoshop.

Adobe says Narayen will step down as CEO, announcing the move even before the board found a successor.

Narayen isn't an outlier. Of 234 global CEO departures in 2025, 32% were planned succession events, up from 22% a year earlier.

Coca-Cola CEO James Quincey frames his departure as one “following waves of organizational momentum.” He notes that the company made strong progress in a pre-AI world, but the next phase requires "someone with the energy to pursue a completely new transformation of the enterprise."

Former Walmart CEO Doug McMillon echoed this before stepping down after a decade. He handed the reins to John Furner in February, saying the role needed someone “faster.” McMillon added that while he could start Walmart's next shift into AI-led shopping and “agentic commerce,” he “couldn't finish” it.

Not all CEO exits are the same

When you hear that a bunch of CEOs are stepping down, it’s easy to assume the story is the same everywhere.

Brian Cornell spent over a decade rebuilding Target, but over time, the stores lost some of what made them stand out. Sales stayed weak, and the in-store experience started to feel less distinctive. “In a world where we operate today, our guests continue to look for Tarzhay,” Cornell joked while announcing his departure. Consumers coined that posh, fake-French nickname for Target decades ago, to define how the stores supposedly elevated the everything-everyday shopping experience to something special.

In other cases, company boards are also now more proactive, firing CEOs deemed ineffectual within the first two to three years. PayPal, for instance, raised its outlook twice during the year, then reported numbers that missed expectations. Within days, the CEO was out. Alex Chriss had been in the role for just over two years. The board didn’t soften the message: “The pace of change and execution did not meet the board’s expectations.” The stock fell as much as 18% before markets even opened.

What is really changing?

Look at the people getting picked next, and you can see where things are headed.

More companies are looking for safety, and turning to leaders who’ve already done the job. In Q1 2026, over 40% of new CEOs in the S&P 500 had prior experience, the highest in years. You can see it in Target too, where the board picked COO Michael Fiddelke, a 20-year company veteran, to succeed Cornell.

A big factor here is how quickly the CEO role now evolves. As Laura Sanderson, RRA’s EMEAI Co-Lead, put it, “Historically, the first couple of years of a CEO’s tenure were about clarifying the mandate and building alignment. That grace period has been severely compressed.” Judith Wallenstein, BCG Global Head CEO Advisory Practice, agreed, “CEOs today have much less time and operate under the watchful eye of a savvier board.”

And that pressure is coming directly from the top. Boards are now the single biggest source of stress for CEOs, and one in three leaders say they have more to prove to their boards than they did just six months ago.

You can see how that changes hiring decisions. If there’s barely any time to settle in, boards are less willing to take a chance. They lean toward people who already know the business or have run something similar before, because they’re expected to deliver almost immediately. Combine that pressure for results with a volatile environment full of noisy new tech, and the CEO seat can feel a lot less cushiony, fast.

The Baseline US

17 Apr 2026, 03:09PM

Private credit isn’t cracking, even as some investors rush to the exits

“When you see one cockroach, there’s probably more.”

That’s how Jamie Dimon describedthe private credit market in October last year, after a string of high-profile bankruptcies. At the time, theJPMorganhead honcho warned that stress in credit markets rarely shows up alone.

More recently, he was less pessimistic. He told analysts he’s “not particularly concerned,” as the company disclosed a $50 billion exposure to private creditduringits first-quarter earnings call. Fed Chair Jerome Powell agreed, saying that the private credit market isn’t flashing signs of systemic risk right now.

That said, there are a couple of things you can’t ignore. These funds saw record redemption requests in the same first quarter. AsMorgan StanleyCEO, Ted Pick put it, “While it’s still a growing asset class, private credit is ‘having a learning moment’.” He added, “We’ll call it an adolescent moment, where both the lenders and the borrowers are being looked at carefully.”

Retail investors are not as optimistic

For years, private credit felt like easy money. Investors put in cash, earned steady returns, and didn’t worry much about getting it back quickly. That worked as long as money kept flowing in.

But part of the issue right now is who the money is coming from. Private credit used to be dominated by large institutions. In recent years, more retail money has come in through Business Development Companies, or BDCs, drawn by steady 9–11%yields, especially after 2021 when access widened.

As the Federal Reserve raised rates, bonds struggled while private credit payouts moved higher. Banks also pulled back from riskier lending, giving these funds more room to grow. It turns out however, that retail investors spook more easily. Investors are asking to withdraw roughly 10% of their money, but funds are allowing only about 5% at a time. That gap in withdrawal limits makes it look like a queue is forming at the exit, causing additional panic.

You can already see it in the numbers.Blue Owl’sCredit Income fund faced requests of nearly 22%, and its Technology Income fund saw over 40% of investors trying to pull money out, yet both stuck to the same ~5% payout.

When funds need to return cash, they often sell their better loans first, the ones that are easier to offload. What’s left behind is weaker. At that point, the mindset shifts, and you are no longer just investing for returns. As Bloomberg journalist Tracy Allowayputs it, “Private credit doesn’t have to dramatically crash to hurt. It just has to stop growing.”

Where the cracks are starting to show

But why are investors suddenly rushing to pull money out?

A large part of the answer lies in where the capital has been going. Private credit firms have lent heavily to smaller companies that banks usually avoid. This is an underserved space, since they fall outside traditional lending comfort zones. Private credit filled this gap after the 2008 financial crisis forced stricter norms for traditional banks.

This worked well when borrowing was cheap. But rates jumped between 2022 and 2024 as the US moved away from its ‘zero interest rate policy’ era, post-Covid. While the last year or so has been somewhat of a rate-cut cycle, most of these loans were written when borrowing costs were much lower.

The catch is that many of these loans come with floating rates. So when rates moved up, the interest payments moved up with them, and they haven’t eased much yet. There is also some crowding in where the money has gone. Analysts estimate that around 15% to 25% of private credit portfolios are tied tosoftware companies. This is becoming an area of concern, as AI starts to replace some of the services these software companies were built around. Investors also become nervous as AI CEOs like Anthropic's Dario Amodel claim, correctly or not, that AI is set to replace these SAAS services en masse.

Recent blowups have also made people more cautious. In cases like First Brands and Tricolor, the same collateral was pledged more than once. JPMorgan, for instance, took a$170 million hit tied to Tricolor’s bankruptcy, with CEO Jamie Dimon calling it “not our finest moment.”

These have raised a more basic question: how closely were some of these loans checked in the first place?

While there hasn’t been an unusual number of missed payments so far, Morgan Stanley estimates default rates in direct lending couldriseto about 8% in a stress scenario, similar to the pandemic period.

None of this is a red flag by itself. But put it together, and you can see why investors are getting a little uneasy.

Banks see opportunity where others see stress

Panic selling is weighing on sentiment in the private credit space, denting valuations. Firms such asBlackstone,Apollo Global Management, Blue Owl Capital, andAres Management are trading at a discount to their levels at the start of the year.

Funds with more than $3 billion in assets are trading at a median discount of 25% to their net values. This discount was around 16% at the start of the year, and there was almost no discount a year ago.

For some investors, this gap reflects rising uncertainty around valuations, liquidity, and credit quality. But others are swooping in. Oaktree’s Howard Marks, the dean of distressed investing, likes to say that there are no bad assets, only bad prices.

As selling pressure builds, long-term capital is stepping in. Morgan Stanley is setting up a fund to buy private credit assets at discounted levels, while Pacific Investment Management Company recently purchased an entire $400 million bond issuance from a private credit fund linked to Blue Owl Capital.

Just this week, Adams Street Partnersraised$7.5 billion for its latest private credit vehicle, more than double its previous fund.Carlyle Grouplaunched a new strategy focused on asset-backed finance, while Ares Management is recalibrating fund sizes to deploy capital more quickly in what it sees as a more attractive entry environment.

On one side, some investors reassessing risks, and rushing for the exit. But it looks like the smart money isn't leaving, and large pools of capital are being raised to buy what those exits leave behind.

“The fog of private credit is going to clear,”saysRached Lord, a senior executive atBlackRock. “There's volatility, but there isn't a bubble.”

The Baseline US

02 Apr 2026

Is oversight fading in the US stock market?

“With President Donald Trump, volatility can rise rapidly and reverse just as quickly,” said Sagar Sambrani, a senior forex trader at Nomura. Trump, a man of unpredictable comments, unverified claims and seat of the pants decisions, is probably the most complicated head of state the markets have had to deal with.

That's not true for everyone, though. The stock market has seen sharp swings recently, and while many retail investors remain uncertain about the direction of markets, a small handful of participants seem to be trading with a crystal ball. Trading activity surged at unusual times, right ahead of Trump’s social media announcement of a five-day halt on strikes targeting Iranian energy sites.

A similar pattern is visible on Polymarket and other betting platforms, where large, concentrated bets are placed on geopolitical events just hours before they unfold. These include large bets on outcomes such as the capture of Nicolás Maduro and US-Israel strikes on Iran.

An on-chain analyst known as Andrew 10 GWEI highlighted a case of suspicious betting involving 38 accounts that he believes are controlled by a single entity, that made in total over $2 million by correctly predicting the February 28 strikes.

According to analysis shared on X, each account places four to ten bets with a near-100% success rate. The accounts began receiving cryptocurrency transfers on February 22, days before placing bets between 11:00 and 12:00 GMT on February 27, ahead of the anticipated strikes.

“All this points to insider activity,” Bubblemaps CEO Nick Vaiman said, pointing to the scale of profits, precise timing of trades, and the unusually high success rate.

In response, betting platforms tightened their rules, restricting trades based on non-public information and limiting participation by those who could influence outcomes.

As concerns grow, focus is shifting to whether the regulator is looking the other way.

The watchmen are leaving: exodus at the SEC

The US Securities and Exchange Commission (SEC) has been losing staff faster than the rest of the federal government. Exits have come in waves. Around 600 employees, about 12% of its workforce, left through buyouts by last May. By September, another 270 had departed outside these programs.

Together, this pushed the agency’s headcount down 18% in the 2025 fiscal year, pointing to a sustained thinning of staff.

Margaret “Meg” Ryan, the US SEC Director of the Division of Enforcement, resigned mid-March after just six months in the role. This high-profile exit has raised eyebrows across the financial industry. Ryan had reportedly clashed with agency leaders over the direction of the SEC’s enforcement program, including the 'unusual' handling of cases with ties to President Donald Trump and his family.

Weeks before her resignation, the SEC also settled rather than prosecuted a fraud case with Chinese crypto entrepreneur Justin Sun for $10 million. The case, filed in 2023, had accused him of unregistered sale of crypto assets and market manipulation that inflated TRX and BTT token prices by $31 million.

Sun is coincidentally, a major investor in a cryptocurrency project tied to President Trump. He holds $18.6 million in $TRUMP tokens, in addition to the $75 million he previously invested in World Liberty Financial, a crypto platform that directs 75% of revenues to Trump-owned entities.

A key mechanism for uncovering insider activity is the SEC’s whistleblower program, which was designed to encourage individuals to report market misconduct by offering financial incentives. But recent data suggests a big decline. In FY25, the SEC awarded just over $60 million to 48 whistleblowers, a steep drop from $255 million in the previous year.

This drop reflects a shift in how claims are handled. The SEC rejected far more whistleblower applications, with hundreds turned down in final decisions. As a result, only 13% of cases led to payouts, down sharply from nearly 50% in 2022.

Stephen Kohn, a partner at a whistleblower advocacy firm, notes that the SEC appears to be applying stricter filters. “They are looking for hyper-technical reasons to disqualify someone,” he said, adding that this runs counter to the intent of the law, which was designed to encourage individuals to come forward and report misconduct despite the risks involved.

Fewer crackdowns, monetary settlements nosedive to a five-year low

Even though the SEC has yet to release its official FY25 enforcement data, an analysis by Harvard Law School indicates that the agency brought 313 new enforcement actions, the lowest level in a decade. This marks a 38% drop from its recent peak in FY2023, where it recorded 501 new cases.

The slowdown is even more pronounced in actions involving public companies. The SEC recorded 56 such cases in FY25, down about 30% from the previous year. Of these, 52 were initiated under former Chair Gary Gensler, leaving just four actions under the new administration, marking the lowest annual count since 2013.

The shift also shows up in outcomes. Total monetary settlements fell 45% YoY to $808 million, the lowest since 2012 and well below the $1.9 billion average between 2016 and 2024.

Taken together, the data points to a clear slowdown in enforcement activity, both in the number of cases brought as well as the scale of penalties imposed.

From “Top Cop” to Facilitator

In his brief tenure, as chair Paul Atkins has called his taking over “a new day at the SEC”. The agency is moving closer to the Donald Trump administration’s push to position the US as a hub for digital assets.

Atkins has made it clear that he wants rules set upfront. The SEC’s Spring agenda included plans to simplify disclosure requirements and focus on what "truly matters" to investors. The aim, he said, is to rely less on after-the-fact action and more on clear guidance.

This shift is most visible in crypto. Within weeks of taking office, the SEC dropped its case against Coinbase, which had argued that some tokens were unregistered securities. Around the same time, it closed investigations into firms such as Gemini, Uniswap Labs, and OpenSea. Similar decisions followed through 2025 in cases involving Crypto.com, Binance, Robinhood, and Ondo Finance.

The change in approach is clear. The SEC is pulling back from earlier crackdowns while it reworks how crypto is regulated.

Even so, some major cases remain. The SEC is in settlement talks with Elon Musk over claims that he illegally delayed disclosing his initial stake in Twitter in 2022, which allowed him to buy more shares before the stake was disclosed.

A federal judge has allowed the case to proceed, with the agency seeking $150 million.

These cases show that while the broader stance is shifting, enforcement has not disappeared. But the trend is clear - fewer crackdowns, less manpower for oversight, and fewer whistleblower rewards.

The Baseline US

20 Feb 2026

Someone has to be wrong about AI

Hi {firstname},

The recent panic unleashed in the stock market around AI, reflects two fears that are increasingly at odds.

One concern is that AI is set to disrupt entire segments of the economy so dramatically that investors are dumping the stocks of any company seen at the slightest risk of being displaced by the technology. Mentions of AI disruption in earnings calls surged to a record in Q4.

The other is a deep skepticism that the hundreds of billions of dollars that tech giants like Amazon, Meta, Microsoft and Alphabet are pouring into AI every year will deliver payoffs anytime soon.

Take Amazon. The company recently outlined plans for $200 billion in capital expenditure for 2026, largely aimed at expanding its data center footprint to support AI workloads. Yet its cloud division, Amazon Web Services, has been growing at a slower pace than its peers.

The scale of private sector spending is even more striking. OpenAI’s projected cash burn is unlike anything the notoriously high spending tech sector has ever seen before. The company expects to burn $218 billion between 2026 and 2029, about $111 billion more than the company’s internal projections from just two quarters ago. Even by Silicon Valley standards, the numbers are huge.

These dueling fears have been brewing for months, but became the focus of the stock market over the past few weeks. When markets try to price in two conflicting futures at once, volatility is the result.

In this week's newsletter, we assess where the market is headed.

AI models have improved a lot since their genesis

To see how much AI has improved, researchers use a benchmark called ‘massive multitask language understanding’, or MMLU. This is a lot like a comprehensive exam covering 57 subjects, including math, history, law and computer science.

The test measures whether a model actually understands tough questions across disciplines. It's the kind of exam not many humans, even the ones with tiger moms, can solve. Human domain experts on average score slightly below 90% in this test.

When GPT-3 was released in 2020, it scored about 44%. The model got many answers wrong. Recent models now score above 90%, which points to better accuracy and reasoning.

Models have also become more competitive with each other. Research by Moody’s notes, “AI models are converging in performance, making small differences in benchmark scores less important.” The study also finds that GenAI tools help professionals work faster while giving them access to more information and insights.

Most industry forecasts suggest that AI development is still in its early innings.

Consulting firms and technology strategists expect AI systems to become more autonomous, more specialized and increasingly embedded in enterprise workflows over the next three to five years. The focus is shifting from general chat interfaces to task-specific agents that can manage workflows end-to-end.

Hyperscalers ready to pour in trillions to advance AI

The scale of capital being deployed by the world’s largest technology companies is immense. The collective capital expenditure from the major AI hyperscalers is set to exceed $650 billion this year, 60% higher than in 2025, as they build out data center and AI infrastructure.

Players like Microsoft, Amazon, Alphabet, Meta Platforms and Oracle are expected to spend in aggregate about 90% of their operating cash flow on capex in 2026, according to Bank of America. That’s up from 65% in 2025.

The private side of the AI world is also fueling this build-out. OpenAI’s plans to spend up to $1.4 trillion on computing power over the next eight years, even as it continues to rack up heavy losses.

The cost of staying competitive in this space is clearly enormous, a Goliath versus Goliath matchup. Even companies generating tens of billions in revenue are burning capital at historic levels to maintain leadership.

OpenAI reached roughly $20 billion in annualized revenue by the end of 2025, yet it is projected to lose around $14 billion in 2026 as it continues investing heavily in new AI models. Anthropic, which owns Claude, shows the same gap. The company is valued at about 27 times revenue, while spending keeps rising. In 2026, it plans to spend about $12 billion to train models and another $7 billion to run them. The company now expects to turn cash-flow positive in 2028, one year later than its earlier projection. The valuation depends more on future outcomes than on current results.

AI scare drives capital into bot-resilient sectors

On February 3, 2026, the S&P 500 Software Index fell 13% in a single session, erasing nearly a trillion dollars in market value.

If AI agents can perform tasks that once required teams of employees and multiple software subscriptions, demand for traditional software licenses could weaken. “We think application software faces an existential threat from AI,” said Nick Evans, a Polar Capital fund manager. His $12 billion global technology fund beat 99% of peers over one year and 97% over the past five.

After the sharp selloff, a growing group of investors is rotating toward sectors that appear less vulnerable to AI disruption. Instead of betting on who wins the AI race, they are asking: Which industries will continue to generate steady returns regardless of how the AI narrative plays out?

Trendlyne’s sector dashboard shows growing interest in Industrials, Energy, select Consumer Staples, and parts of Healthcare. These industries benefit from physical assets, regulatory complexity or human-centric demand that is harder to replace with code.

Importantly, these sectors are not completely AI-untouched, but are integrating it more selectively to raise efficiencies. Industrial firms are using AI for predictive maintenance, while Healthcare providers are applying AI for diagnostic support and administration. Energy companies are optimizing logistics and drilling efficiency through data-driven models.

Not everyone believes software’s pain will last. Michael Toomey, managing director of equities trading at Jefferies, noted that 73% of software stocks are oversold and that “we're due for a vicious rally in software.”

In this market, there could be value for investors in focusing on the fundamentals: companies with steady cash flows, improving macro conditions, and disciplined AI integration likely offer a more predictable path in returns, than trying to bet on the next AI model breakthrough.

As always,
The Trendlyne team