Good morning, investors. Earnings season is here.
And Wall Street wants huge numbers this quarter.
Could this trigger an AI correction? Here's what I expect ↓
Earnings Season Forecast
Wall Street expects S&P 500 earnings to grow 22.5% y/y in Q2 alone.
That sounds great...until you realize some sectors are expected to grow 65% to 116% y/y.
The question is no longer whether earnings will grow.
It's whether they can clear the bar investors already set.
I believe expectations may be the highest risk in the market right now.
Analysts expect:
S&P 500 EPS: +22.5% YoY in Q2
Technology earnings: +65.5%
Energy earnings: +116%
Materials earnings: +32.7%
So the concern isn't weak earnings.
It's that expectations have become extremely strong.
The average AI stock already trades as if extraordinary growth will continue for years.
If hyperscalers deliver another quarter of exceptional results, the rally probably continues.
If they don't? The market may rotate.
Money could move from expensive AI winners into the companies that spent most of 2026 being ignored.
The next few weeks will decide whether this becomes an AI correction or an everything else rally.
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Portfolio Update
I expect volatility in the coming weeks. I'm still 23% in cash and haven't found any opportunities compelling enough to make a major move.
Elsewhere
🐻 Berkshire Hathaway's cash pile hit a record $397 billion. Buffett now has enough cash to buy 474 S&P 500 companies outright. I think he's expecting trouble ahead. (TheStreet)
🎮 Nvidia has erased more than $1 trillion in market value from its highs. Investors appear to be rotating into other semiconductor winners like Micron. If Nvidia continues delivering, the long-term story remains intact. (YahooFinance)
🤖 Mark Zuckerberg posted on X for the first time since 2023 to promote Meta's Muse AI. Meta's AI ambitions continue to grow beyond advertising. Whether AI becomes a major profit driver remains an open question. (Benzinga)
📉 The Magnificent Seven are no longer carrying the market alone. Investors are increasingly rewarding pure AI names over established cash flow machines. I think such changes rarely last forever. (YahooFinance)
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