Point Frederick – Spinnaker – May 15, 2026
Some companies will get AI right and some will stumble.
The extraordinary thing about current markets is the behavior of earnings, particularly in technology.
This is structural change, not mean reversion.
The data generating process has shifted. This is due to the initial impact of AI starting to gain tangible traction in terms of enhanced productivity.
We’re seeing it first in the technology sector. But it will spread like wildfire across the economy.
The firms that are going to get it wrong will be those who think it’s solely a tool to cut labor. They emphasize the destruction.
The companies that get it right will see it as a new way to enhance the creative part of capitalism.
If your employer is forcing you to use AI so that they can automate you out of a job, you might be working for the wrong kind of people.
But if your boss wants you to use AI to expand the aperture of your engagement, then you are in the right place.
This is extraordinary, especially coming after a long period of strong performance in the markets that spanned tariff wars and actual wars.
‘what a fantastic chart from @kevinmuir showing how unusual this earnings season has been’
More explanation for the strength in earnings. Technology productivity is a driving force for earnings, along with re-discovered pricing power.
‘S&P 500 margins going through the roof.’
These names can move higher but when they turn, it will be hard. Think Silver earlier this year.
‘they say a picture is worth a thousand words... it’s a “spot up, vol up” world, you just live in it this chart nails the option dynamics for members of the $SMH ... horizontal is the %ile of 1m implied vol (2y lookback window)...vertical is the %ile of the ratio of implied to realized. what is incredible here is that the mean and median 1m return of these stocks is 31 and 26%, respectively. two things are true at once: these stocks have such momentum, history tells us they can easily run further AND... they are likely to experience a very sizeable drawdown in the not too distant future.’
Funds tried to play fast and cute with tech by selling into the “dumb” money and now the funds are scrambling to get back in the race.
‘Nomura’s McElliott posits that part of the relentless bid we’ve seen in tech has been funds desperate to catch up.’
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