To me, this is one of your best charts. It highlights the imbalance in the US equity market. Why are these tech companies out performing so much? In part because they're investing in generative AI semiconductors and application software, using their strong cash balances to buy each others offerings. Works well, if end demand is there. Turns into a disaster for them if not….
Thanks Peter, indeed, and you might argue if there really is a "there" there on AI in terms of productivity boosts, then eventually all non-tech companies should see a surge and catch-up (and if not, then it's the catch-down case)
“which of the lines in the chart below has the biggest scope to surprise?”
Such an awesome question, and probably one you should poll. I’m going to vote the Blue line, which is why I am still a BUYER at these lofty price to earnings multiples.
To me, this is one of your best charts. It highlights the imbalance in the US equity market. Why are these tech companies out performing so much? In part because they're investing in generative AI semiconductors and application software, using their strong cash balances to buy each others offerings. Works well, if end demand is there. Turns into a disaster for them if not….
Thanks Peter, indeed, and you might argue if there really is a "there" there on AI in terms of productivity boosts, then eventually all non-tech companies should see a surge and catch-up (and if not, then it's the catch-down case)
“which of the lines in the chart below has the biggest scope to surprise?”
Such an awesome question, and probably one you should poll. I’m going to vote the Blue line, which is why I am still a BUYER at these lofty price to earnings multiples.
indeed, I would personally be surprised if both lines keep their trajectory
Reversion to mean-right in between. HT earnings sideways at high level, LowTech up and to the right. Credit cycle easing. Happy Festivus!