June 12, 2026
Not investment advice.
A brief note from the road, tonight in London.
In meetings with investors, the sense of trepidation—rather than opportunity—regarding AI is palpable.
It is true that if AI is a mirage, the economy will indeed crack. But to me it looks real, which is why the big spenders at the epicenter of this have committed to investing $1T in 2027 and even more in later years.
Investors remain skeptical, even as everyone I spoke with acknowledges the technology itself is transformational.
Two perspectives I find useful:
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The market is differentiating between the people writing the checks and the people receiving them, as you can see below.
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If you break down the returns of the spenders, their profits are growing; the market is simply paying less for them. Microsoft, which is down the most, is representative—EPS up, PE down. Google has outperformed, but based on earnings growth, not multiple expansion.
Said differently, the market is pessimistic about this investment cycle working even as the evidence to date shows that the investments are working. That’s why EPS is growing so fast.
We are in a global productivity boom, the epicenter of which is the US. Global growth is strong, but that is because the US is strong; growth in Europe and China is weak. This is bullish for US stocks and the dollar, and probably bearish for US bonds, in part because a wave of issuance is coming—even if inflation cools from here, which, with tariffs and the oil shock receding and labor displacement ahead of us, it almost certainly will.
I’m on a plane next Friday and won’t write.
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