TheChek News Flow

Even as tech surges, many other sectors in the market are trading at surprisingly attractive prices.

Key Points

Aside from technology, a roaring bull market this isn’t.

Several key sectors—financials, healthcare, and consumer staples—are trading below their early-year highs. The S&P 500 index’s 10% rise so far this year has been driven by a 25% rise in the tech sector.

With an effective weighting of about 50% in the index, tech is so dominant now that it can power the market even if other sectors are in the red, as healthcare and financials are this year.

“If you’re not a chip company or building data centers, you’re out of luck,” says Michael Jamison, managing partner at Griffin Asset Management.

One sign of the malaise outside tech is that many blue-chip stocks have been hitting 52-week lows lately. Barron’s identified 10 quality stocks that hit the new-lows list in the past week. Many carry 3%-plus dividend yields.

Let’s start with the king of home improvement.

“I know Home Depot is out of favor, but its scale is enormous,” says Jamison, a fan of the stock and its 3% dividend yield. There are few more dominant retailers.

Investors are worried about depressed home-building and remodeling activity, and the recent uptick in interest rates doesn’t help. The stock is down almost 20% in the past year, to $304, and trades for about 20 times estimated 2026 earnings. When housing perks up, Home Depot should rally.

As the leader in animal health, Zoetis once was viewed as a can’t-miss play on Americans’ infatuation with pets. But pet-oriented medical spending unexpectedly slowed, and Zoetis has been hammered. The stock, at around $75, is off 40% this year and 70% from its 2021 peak.

Morgan Stanley analyst Erin Wright is bullish on the stock, citing the “unmatched breadth” of the Zoetis portfolio.

The stock now trades for about 11 times projected 2026 earnings and yields almost 3%. Zoetis isn’t broken. It’s still capable of high-single-digit annual earnings growth, and there have been recent purchases by company insiders.

Accenture, the consulting and outsourcing leader, keeps telling investors that AI won’t disrupt its business, but Wall Street fears the worst, and the stock keeps dropping.

Accenture shares, at $164, are down nearly 40% this year and trade for under 12 times projected earnings for its fiscal year ending in August. It has a 4% dividend yield and has been making ample stock buybacks, which could eventually lift the share price.

A consulting initiative from OpenAI has rattled the stock lately. UBS analyst Kevin McVeigh remains bullish, noting that Accenture has the scale, “deployment capability,” and skills that upstart AI players lack. He has a Buy rating and an admittedly ambitious $320 price target.

Marsh, a leader in the property-and-casualty insurance brokerage industry, long commanded a premium valuation of over 20 times earnings as a “capital light” way to play insurance industry growth without taking underwriting risk.

Shares of Marsh and other insurance brokers have been hit for two reasons: a potential AI threat to brokerage and consulting services, and a more competitive P&C pricing environment, which is dampening revenue growth. The AI threat to the brokerage business seems overblown given the complexity of corporate insurance needs.

Marsh stock, at $160, is down 28% over the past year and now trades for 15 times projected 2026 earnings. UBS analyst Brian Meredith has a Buy rating and $235 price target, citing a resilient business model and ample capital returns.

In a K-shaped economy driven by affluent Americans, McDonald’s reliance on lower-income consumers hurting from high gasoline prices worries Wall Street.

The stock, at around $275, trades for around 20 times earnings and yields almost 3%.

“We believe risk/reward for MCD shares is attractive despite near-term pressures, given catalysts with potential to drive market share gains & strengthen U.S. sales growth, and defensive characteristics,” wrote UBS analyst Dennis Geiger in a recent client note.

Wall Street hates McCormick’s deal in March to buy the larger Unilever food business. Investors fear McCormick is overpaying, taking on too much debt, and diluting one of the better food franchises, which had been focused on spices and flavorings.

The damage to McCormick stock could be over with the shares off 31% this year to around $46. TD Cowen analyst Robert Moskow is bullish, arguing that Unilever has good brands like Hellmann’s and gives McCormick greater exposure to higher-growth emerging markets.

The stock now trades for about 15 times projected 2026 earnings—half the multiple of three years ago—and yields 4%.

Republic Services is No. 2 nationally behind Waste Management in garbage collection and recycling. It has a steady growth business with a competitive moat in scarce landfills, annuity-like revenue, and 90%-plus annual customer retention.

This year’s earning growth is expected to be subpar at around 4% but accelerating to nearly 10% in 2027. The stock, at about $208, has an above-market multiple at 28 times projected 2026 earnings. Garbage is a good business, and Republic stock is rarely cheap.

Abbott Laboratories used to be one of the most reliable big companies in the healthcare sector.

That changed this year. First-quarter results showed a decline in its infant formula business, and there was a cut to 2026 earnings guidance related to Abbott’s pricey purchase of Exact Sciences, a maker of a colon cancer diagnostic test.

The stock now looks appealing after falling 32% this year to $85. It trades for 15 times projected 2026 earnings—down from a price/earnings ratio of 25 a year ago—and yields 3%. UBS’s Priya Sachdeva is bullish, citing “the resiliency of ABT’s diversified portfolio.” The company could get back to 10%-plus earnings growth in 2027.

Medtronic, a leader in medical devices, has seen its stock fall 20% this year to around $77 and is no higher than it was a decade ago.

The potential negative impact of GLP-1 drugs on knee and hip replacements, on top of tariffs, has depressed the medical-devices sector this year. Medtronic’s business, however, is focused on GLP-1 resistant cardiology and neurology.

The stock looks inexpensive, trading for 13 times earnings in its fiscal year ending in April 2027 and yielding 3.7%. Profit growth is expected to accelerate to about 10% next fiscal year from 2% in the current one.

Danaher offers medical diagnostic products and equipment used in the biotech industry.

Those are strong end markets, but the stock is down 28% this year, to $164, as investors reacted to weak core sales growth of just 1% in the first quarter. The company has a high-single-digit long-term annual revenue target. The stock now trades for 20 times 2026 earnings. Danaher’s earnings per share are expected to rise about 8% this year and in 2027, with the company targeting double-digit long-term growth.

Quantum computing may soon take off. Are the pure plays ready to go the distance?

Key Points

Quantum computing has graduated from a theoretical curiosity to a stock market phenomenon. The sector’s shares routinely post some of the biggest moves in the market, up and down, as investors place their bets on the future of computing.

Quantum computers, offshoots of quantum mechanics, can explore multiple solutions at once, and promise the kind of processing power that could revolutionize medicine, materials science, and other fields.

The technology is unquestionably tricky for investors. The pure-play stocks—the shares of companies that concentrate their efforts wholly on quantum computing—trade mostly on sentiment, since none of the companies have yet to turn a profit. Most are burning cash as they develop products.

The performance of the stocks has been all over the map. D-Wave Quantum last year more than tripled and Rigetti Computing

rose 45%, handily outstripping a 20% gain for the tech-heavy Nasdaq 100. IonQ rose just 7.4%, while Quantum Computing lost 38%. Such varied outcomes suggest idiosyncratic stories, rather than industry tides, are dictating the winners and losers.

Valuations tell a tale of two worlds. IBM, a tech mainstay with a robust quantum effort, is trading at a measured 2.9 times forward sales. Hype has pushed Rigetti Computing and D-Wave to price-to-sales ratios of 746 and 268, respectively.

Numbers like that aren’t for the faint of heart. But by many accounts, the industry is about to take off. Barclays anticipates that quantum systems will achieve a definitive edge over traditional computers by 2027, provided their capabilities hold up under intense technical scrutiny. Estimates from McKinsey project the market will grow to anywhere from $43 billion to $72 billion by 2035.

As the future of quantum computing starts to take shape, there are plenty of ways to play it. Here are six stocks worth considering.

IonQ: This is the largest publicly traded pure play by market capitalization—and one of the boldest. CEO Niccolo de Masi famously referred to the company as the “Nvidia player” of quantum. Last year, the company became the first quantum company to surpass $100 million in annual revenue under generally accepted accounting principles. First-quarter earnings further demonstrated its growth, as IonQ reported a narrower-than-anticipated loss and a sharp spike in contracted backlog, a clear sign of accelerating demand.

D-Wave Quantum: The company has cornered the market for “annealing quantum,” an approach tailored to optimization tasks like logistics and data sampling. However, D-Wave is targeting the launch of a superconducting “gate model” system this year. This more versatile approach uses ultracold electrical circuits to store data, and timed pulses of microwave energy to perform calculations. Revenue fell 81% in the first quarter due to a system sale in the prior year, but Jefferies’ Kevin Garrigan noted that “the underlying momentum remains.” D-Wave posted record bookings and increased its system sales from one a year to two or three.

Rigetti Computing: After a monthslong delay, Rigetti released its largest quantum system to date in April. The company is taking time to refine its technology before scaling to bigger systems, which has led to several readjustments of its timelines. To reduce its dependency on research and development contracts from U.S. government agencies, Rigetti is prioritizing sales of its machines. The company sold a 9-qubit Novera processor to a Canadian university in March, just months after an $8.4 million sale to a research institution in India.

IBM: As a cornerstone of the quantum ecosystem, Big Blue offers cloud-based access to its vast quantum fleet and maintains Qiskit, an open-source development kit enabling users to build quantum computing programs. Morgan Stanley analyst Erik Woodring tells Barron’s the market is likely “discounting or underwriting some degree of quantum in the stock price.” While IBM’s scale and diversification usually reduce volatility, shares popped when the company unveiled its road map to achieve fault-tolerant quantum supercomputing by 2029.

Xanadu Quantum Technologies: Less than two months after its U.S. trading debut, Xanadu stock cratered when the company filed a prospectus allowing shareholders to register their stock for sale. The selloff reflected market anxiety over an increase in shares rather than perceived flaws in the business itself. Xanadu is betting on photonic quantum computing, which uses light particles to carry and process information. This model can operate at room temperature, potentially offering a faster route to stable, large-scale systems. Revenue increased fourfold in the latest quarter, with Xanadu citing continued adoption of its popular software platform, PennyLane.

Quantum Computing: This company is no stranger to uncertainty, given that it spent months searching for a permanent CEO before promoting Yuping Huang in January. The company has faced scrutiny from short sellers who claim it fabricated revenue and misled investors about its quantum chip foundry. To date, Quantum Computing hasn’t acknowledged these claims. First-quarter earnings may have shifted sentiment, as shares jumped 16% despite mixed results. The company has signaled its intentions to scale its presence in quantum communications and photonics through recent acquisitions of Luminar Semiconductor and NuCrypt.:

Nvidia trades at a discount to other semiconductors and can gain 50% from here.

Key Points

Yes, a $5 trillion company trading at an all-time high can be cheap. It’s an opportunity for investors to earn 50% while the company’s market capitalization marches toward $8 trillion.

This, of course, is about Nvidia, the artificial-intelligence chip giant that has transformed the stock market and may be on its way to transforming the entire U.S. economy.

As CEO Jensen Huang accompanies President Donald Trump on his state visit to China and Nvidia prepares to report earnings after the close on May 20, the company is on the cusp of earning more than $190 billion in calendar year 2026. That would be the best year for any corporation ever, according to Dow Jones Market Data. Saudi Aramco, which earned about $160 billion in 2022, holds the current record.

Against that setup, how could Nvidia be cheap? For that matter, how could things get even better for the maker of graphics processing units?

For starters, the stock trades for about 24 times earnings expected over the coming 12 months, a 25% discount to its historical value and 5% below the PHLX Semiconductor Index, which includes Advanced Micro Devices, Micron Technology, Taiwan Semiconductor Manufacturing, Intel, and others. Nvidia, as a fast-growing leader, typically trades at a 40% premium to the index.

Since the start of 2025, Nvidia has trailed the index by more than 70 percentage points. Seventy. The market has suddenly forgotten about Nvidia while going gaga over central processing units, or CPUs; memory; and application-specific chips such as Alphabet’s TPUs.

But if demand for semiconductors has exploded—as the earnings and stock performance of countless semiconductor companies imply—is Nvidia stock really going to be left in the dust? No, and the thesis for buying Nvidia here is quite simple. Investors really just need to believe one thing: This isn’t yet as good as it gets for AI computing.

There are several reasons to believe just that.

For starters, look at the earnings reports of countless companies in the semiconductor value chain. “We’re still in the early days of the AI infrastructure growth,” Jon Kemp, CEO of semiconductor materials supplier Qnity Electronics, tells Barron’s, adding that the growth is moving from the data center to edge computing and physical AI applications. “Wherever people are located…the proliferation of [AI] beyond data centers into every other part of the industrial economy is one of the things that gives us confidence in the durability of the growth cycle.”

Strange as it may sound, AI applications still haven’t achieved widespread use. Just 20% of smartphone users have used an AI agent application on their phones, according to ARK Investment Management’s chief futurist Brett Winton. That number will be approaching 100% in three years. That makes 2026 more like 1996 rather than 1999, if investors are thinking about dot-com era comparisons.

AI is still an accelerating arms race. The four hyperscalers— Amazon.com, Alphabet, Meta Platforms, and Microsoft —are now expected to spend almost $700 billion building out their AI businesses in 2026. At the start of the year, that number was closer to $500 billion. Looking into 2027, Melius analyst Ben Reitzes expects capital expenditures, including those from the likes of Oracle, to top $1 trillion.

The spending spree is on. How tech giants can afford this is a valid question. The answer: easily, by deploying substantial portions of their operating cash flow into data centers, but not at the expense of positive free cash flow this year. The “big four” are expected to generate earnings before interest, taxes, depreciation, and amortization, or Ebitda, of roughly $800 billion. Their balance sheets are also pristine, with essentially no net debt among them.

If they really wanted to get aggressive, they could add $1 trillion to $2 trillion in debt. (To be sure, there has been complex off-balance-sheet financing of some data centers, such as Meta’s in Louisiana, but more can be done.)

As for where Nvidia shares can go, investors can just look at Wall Street’s estimates. The average analyst price target is $270, up 20% from recent levels. That works out to 24 times estimated fiscal-year 2028 earnings, which are expected to expand 35% compared with fiscal-year 2027. (Nvidia’s year ends in January, so fiscal 2028 is essentially calendar year 2027.)

That target is conservative. If Nvidia were just to trade in line with the 26 average multiple of other semiconductor stocks, it would be a $290 stock. Its historic premium to the semiconductor sector justifies a $390 stock price. That target isn’t conservative, but Nvidia shares can easily hit $300 over the coming 12 months, up 33% from recent levels.

To be sure, there are risks. For one, bubble fears persist. Searches for “AI bubble” on Google are up about 400% year over year, having peaked in November. Nvidia’s earnings outlook doesn’t leave much room for error either. It will have to beat analyst sales growth estimates of almost 80% to satisfy investors. A miss isn’t even on the table as Nvidia has beaten sales estimates by an average of about 3% over the last three quarters.

Still, investors’ initial reaction to those earnings reports was to sell the stock (though it eventually recovered). There also remains a persistent fear that Nvidia’s GPUs could lose share to a host of other chips, including application-specific chips from the hyperscalers and CPUs from Intel that are well-suited for agentic computing.

For now, these prospects are distant. Chip demand is only strengthening. AI infrastructure provider Vertiv Holdings reported a 252% increase in fourth-quarter 2025 orders. The company stopped providing detailed order numbers because backlogs were extending further into the future (and perhaps because investors tend to over-focus on one metric). Automation technology provider Zebra Technologies expects memory chips to be in short supply through 2027. And power-generation equipment maker GE Vernova is booking business into the next decade.

What’s more, Arm Holdings and Intel recently said they were unable to meet all demand due to supply-chain constraints. Shortage fears have Tesla and SpaceX CEO Elon Musk building a semiconductor fab to ensure enough chips for all the AI applications he is dreaming up.

The total addressable market for AI computing “is bigger than anyone thinks,” says Reitzes. AI agents, which are becoming ubiquitous, will add to demand, for example. These agents, created from Gemini or another AI model, function by constantly inferencing—or accessing—AI computing.

Nvidia chips remain the heart of AI systems. GPUs are particularly well-suited for AI computing because they can handle myriad tasks simultaneously, rather than completing them sequentially like a traditional CPU. The accelerator chips from the likes of SpaceX or Alphabet are designed to perform specific tasks with high efficiency, in addition to the computing that Nvidia chips can handle.

The entire AI computing pyramid will grow, and the base of that pyramid will remain Nvidia.

A grimace is worth a thousand words.

The facial expression in question belongs to Microsoft CEO Satya Nadella earlier this week in an Oakland, Calif., courthouse as he took the stand in Elon Musk’s lawsuit against OpenAI.

Nadella’s discomfort is understandable. Here we have the usually sweater-clad executive in a suit and tie, testifying under oath about his private correspondences, in a multitrillion-dollar trial where he’s locking horns with the richest man in the world.

No doubt Nadella would rather have been at the dentist. And yet, fighting this fight is very much part of his remit, particularly since as of last October, Nadella turned over the keys of the commercial side of Microsoft (which accounts for more than 70% of its revenue) to Judson Althoff, putting him in charge of the most important part of the company.

“I am focused on horizon zero and horizon one,” Althoff tells me in high Microsoft-speak. “Satya tends to focus on horizon two and horizon three.” Translation: Judson’s running the current business. Satya’s going to figure this artificial-intelligence thing out.

The two endeavors are inextricably linked, as Microsoft hopes that business customers increasingly will adopt its Microsoft 365 Copilot AI product and other AI offerings. In other words, selling AI is very much a here-and-now matter for Microsoft.

Even though Microsoft says that Nadella will “be laser-focused on our highest-ambition technical work,” the CEO must also wrestle with massive strategic issues, like Microsoft’s relationship with OpenAI and its ChatGPT large-language model, the “brains” of its AI endeavors. Microsoft has invested nearly $12 billion in OpenAI over the past seven years, and now has a 27% stake in that company worth a staggering $230 billion.

Musk’s lawsuit is an existential threat to that relationship as he seeks to wind OpenAI back to its 2015 nonprofit roots—as well as undo its special relationship with Microsoft. (Microsoft also has a partnership with OpenAI rival Anthropic.)

And yet there may be even more to Nadella’s pained look than just battling Musk—that being Microsoft’s stock performance, which over the past year has declined by 9.6% versus gains of 138.1% for Alphabet and 27.3% for the S&P 500 index.

Of course, Microsoft shares over Nadella’s tenure, which began on Feb. 4, 2014, have been like a SpaceX rocket, up 1,025% versus 322% for the market. Nadella’s predecessor as CEO, Steve Ballmer, once told me, “I love Satya. I haven’t sold my stock.” (Ballmer reportedly owns some 300 million shares, now worth $130 billion. They were valued at just under $12 billion when Nadella took over as CEO.)

Microsoft’s recent quarterly numbers were up briskly almost across the board. The company reported adjusted earnings of $4.27 a share on revenue of $82.9 billion for its fiscal third quarter, while analysts expected $4.05 a share on revenue of $81.4 billion. Its Azure cloud business grew a stellar 40%.

On Friday, the ever-voluble hedge fund manager Bill Ackman disclosed in an 887-word tweet that he had recently acquired a position in Microsoft as “a core holding.”

Still, AI fears are making the Beast of Redmond, as Microsoft is sometimes called, look a little less fearsome. The Financial Times reported that Chris Hohn, the highly regarded manager of TCI Fund Management, sold most of its $8 billion stake in Microsoft, which it had held for the past 10 years. TCI, the most profitable hedge fund in the world last year with a sterling long-term record, noted in its letter to shareholders: “We reduced our investment in Microsoft because the rapid progress in AI introduces uncertainty over Microsoft’s competitive position in the future.” (It will be great fun to see who’s right here, Hohn or Ackman.)

Another risk to Microsoft posed by AI is prodigious capital spending on chips to run AI, data centers, and electric power generation. Capex has climbed from $24 billion in fiscal year 2021 to $88 billion in fiscal year 2025. The $190 billion projected this year is based on MSFT’s 2026 calendar year.

That multi-hundred-billion-dollar spend, plus Hohn’s concerns about AI making Microsoft’s legacy business obsolete and questions about AI adoption by Microsoft’s customers, are making Wall Street nervous and raising questions that Althoff, in his increasingly public-facing role, wants to address. (Note that Althoff, 53, may one day be in line to become CEO of Microsoft, though that would be years off, as Nadella, 58, isn’t likely to be going anywhere anytime soon.)

So, what does Althoff think about those AI worries?

“They don’t concern me, because I think the market is still trying to figure out AI,” he says. “When customers or analysts start thinking, ‘Gosh, AI is gonna eat software or SaaS,’ it comes from the place of seeing parlor tricks. It’s very easy to ask a model to create a document or spreadsheet. It is materially more difficult to say, ‘Take this presentation for a meeting with my board, update this data on our financial performance, and give me the six-trailing quarter view of a certain business and have it be in context, accurate, and pulling from secure sources.’ ”

As for the capital being spent, Althoff is equally sanguine. “Yes, it’s expensive,” he says. “I don’t get concerned. We’re building for our first-party AI solutions and infrastructure for Anthropic. We’re building for a future where the combination of human ambition and AI will come together to run the world’s business processes.”

Microsoft says it has 20 million paying seats for its premium AI Copilot product out of a total of some 450 million business seats. Tigress Financial Partners, which has a Buy rating on the stock and a price target of $680 (the stock currently trades at $407) notes that “adoption is scaling rapidly, with paid Copilot seats growing triple digits year over year to tens of millions of users.”

But what are customers actually doing with Microsoft’s AI products? Raj Sharma, global managing partner for Growth & Innovation at EY, has rolled out an agentic AI platform, called EY Canvas, to facilitate the company’s core global audit business, based on Microsoft AI products.

“If I looked at all the [technology] stack and the capital spend that is required, only three companies stood out to me for an enterprise of our size: Microsoft, Google, and AWS,” says Sharma.

“We picked Microsoft because of our longstanding relationship, and they will give us access to any models, whether it is OpenAI or Anthropic. Also, there was a level of trust with them that they will co-innovate with us.”

Rob Goldstein, COO of BlackRock, says his company worked with Microsoft and its AI tools to translate BlackRock’s websites into local languages around the world. “These are highly regulated websites that need to have all sorts of information about the company and the products we provide,” he says. “We feel very good about our relationship with [Microsoft],” but he adds, “this will not be a one-vendor game.”

All hasn’t been smooth sailing in Microsoft’s AI efforts. The Wall Street Journal reported that customers have been confused by various Microsoft AI brands and products, and that some have preferred using Google’s Gemini and other options. The company recently changed up leadership in its AI teams, presumably to address these issues.

To longstanding Microsoft watchers, as my colleague Adam Levine noted in a recent Barron’s cover story, the choppy start may be chapter one of a familiar narrative: Microsoft typically isn’t first, but the company’s vast installed base means it can switch into Beast Mode and win in the end.

That last point almost makes Althoff cringe. “We take nothing for granted,” he says. “While I am proud of our base and grateful to our customers for trusting Microsoft, I want to make sure that we continue to build the best AI capability. I always say to my folks, ‘Neither winning or losing are statements of perpetuity.’ ”

The bottom line is that companies want to know if shelling out big bucks today for AI tools, from Microsoft or its competitors, is truly worth it. Right now, the jury may still be out. In a new white paper, “LLMs Corrupt Your Documents When You Delegate,” researchers concluded that for longer tasks, “current LLMs are unreliable delegates: They introduce sparse but severe errors that silently corrupt documents, compounding over long interaction.”

The three authors of the paper are from Microsoft Research.

For investors with insomnia, Nasdaq CEO Adena Friedman has just the tonic, and it’s right around the corner: 23-hour-a-day trading. (Still only five days a week, though.)

I asked Friedman why this was necessary.

“Technology has really continued to advance to allow for investors from all over the world to be able to trade in U.S. equities anytime during the day,” she says. “Trading 23-5 is already happening. It’s just happening in the dark. Our systems today open at 4 a.m., and we allow trading to start then, and they close at 8 p.m. So, we are already trading outside of U.S. market hours. What we’re doing is basically expanding that.”

Traditional U.S. stock exchanges are open only from 9:30 a.m. to 4 p.m. Eastern Time, but extended trading has been growing through various means. Some institutions and individuals trade in lower-liquidity after-hour sessions. Some broker-dealers offer extended trading for certain stocks, and there are also derivatives that can mimic after-hours trading. Crypto and currencies trade 24-7.

Friedman notes that Nasdaq is partnering to facilitate longer hours. “We’ve worked with the industry to bring the consolidated tape and have that launch at the same time, which is Dec. 6,” she says. “You will have central transparency of all of the trading and quoting activity that’s occurring in the lit venues and dark pools around the world.” The exchange plans to add circuit breakers to halt trading if prices go up or down too much, “so we have more trading guardrails,” she adds.

Friedman notes that the Depository Trust & Clearing Corp. is extending its hours so there will be real-time clearing.

“There are millions of investors who want to access the U.S. economy and trade amazing companies, and this will give them a good infrastructure to be able to do that,” Friedman says. “We feel that it will increase overall demand and increase the pie. We’re working with a lot of clients who are looking at how to expand their infrastructure to support 23-5 trading, and we can provide technology to support them.”

AI boom could end the de-equitisation ‘put’

This US bull market has not been accompanied by the usual deluge of equity issuance. Until now

Shrinking equity supply has helped this bull market defy the bears. Fewer new shares have been listed. More old shares have been delisted. This may be changing.

Back in 2003, public equities were looking very cheap compared with bonds. The S&P 500 index had dropped 50 per cent from post-dotcom-bubble-crash peaks and 10-year US Treasury yields, which move inversely to prices, had fallen to 3 per cent. However, institutional investors, and their regulators, had been so scarred by the bear market that they could not, or would not, close this valuation gap. 

This offered an opportunity to less traditional buyers. Listed companies bought their own shares via buybacks, or their competitors’ shares via debt-financed takeovers. Private equity investors joined in by borrowing cheap debt to delist public companies. Issuance via IPOs, secondaries and equity-financed mergers and acquisitions slowed to a trickle.

Equitisation was over, de-equitisation had begun. Public markets started to shrink. Predicting this trend helped make my career as an equity strategist. And it just won’t go away. Both the US and UK public equity markets have “de-equitised” to some extent in each of the past four years, according to Datastream.

It looks very different to the acceleration of equity issuance associated with the last major tech-driven bull market. In 1998-2000, the US IT sector increased its equity base by 40 per cent. In the past four years, it has shrunk it by 4 per cent.

This is because large-cap US IT companies haven’t needed new funding. In fact, their capex-lite business models have allowed them to return cash to investors. The Magnificent 7 Big Tech stocks bought back $230bn of shares in 2025. Some of that was used to finance employee share plans, but it also provided the funding for IPOs elsewhere in the sector. This tech bull run has been self-financed. 

It all seems very different to previous bubbles. Canals in the 1800s, railways in the 1840s, radio stocks in the 1920s and telecoms, media and technology shares in the 1990s were all notoriously capital-intensive booms.

But Big Tech’s capex-lite model seems to be changing. Alphabet, Amazon, Meta and Microsoft are expected to collectively invest $725bn this year as they go all-in on the AI boom. Consequently, Meta and Alphabet have paused their buybacks. That’s a big change from the combined $92bn they recycled back to the market in 2024.

Apple has chosen to sit out this capex boom and has announced another $100bn of share buybacks in 2026. But even here the positive impact will be reduced. At a $4.3tn total market cap, $100bn buys a lot less Apple stock than it used to.

Of course, there have been large amounts of new tech shares issued and capital raised, but this has not been via the public markets. Instead, OpenAI and Anthropic have been able to privately raise a combined $152bn in 2026.

This private market equitisation now looks set to spill over into the public market. SpaceX, OpenAI and Anthropic are exploring IPOs, seeking collective valuation of up to $4tn. The public equity market will not need to soak up all these shares immediately, but earlier-stage private investors (and employees) will surely want to cash out, at least partially. Their unsold stock may overhang the public markets for years. A $4tn collective valuation would amount to a substantial 6 per cent equity expansion of the US public equity market, a figure last seen in the late 1990s bubble.

De-equitisation is a key reason why the current bull market has been able to defy high valuations, rising interest rates, trade wars and geopolitical tensions. There have been periodic market wobbles, but these have not been preceded by the equity oversupply associated with the bursting of previous bubbles. Instead, listed companies have kept buying back their shares. Private equity has kept taking companies private. The de-equitisation put remained in place. 

And, as any undergraduate economist knows, shrinking supply and rising demand should lead to higher prices. The bears have missed this point.

However, we can finally see a meaningful amount of public equity supply coming down the track. The de-equitisation “put” — where shares are supported by buybacks or deals to take companies private if they fall too far — may start to fade, at least in the US.

Back in the late 1990s bull market, a senior equity capital markets banker said to me: “If the ducks are quacking, feed them.” In US big-cap tech, they have been quacking for some time. It finally looks like they are about to be fed.

Alliance chief Mark Rutte set to meet defence groups at meeting in Brussels next week

Nato secretary-general Mark Rutte will press European arms companies next week to increase investment and boost production, as the defence alliance seeks to strengthen the continent’s military capabilities and appease US President Donald Trump.

Rutte is set to meet top European defence groups in Brussels to urge them to move quickly and to lay the groundwork for key announcements at Nato’s annual summit in Ankara in July, people familiar with the matter told the FT.

Ahead of the meeting, companies have been asked to share information about major investments and their ability to boost production, with a particular focus on areas such as air defence and long-range missiles.

Rutte regularly meets with Europe’s top defence executives but gathering the representatives of a large number of companies at a single meeting is unusual, said people in the industry. His message on what the alliance expects from the groups also underscores the urgency inside Nato to demonstrate industrial expansion at the leaders’ gathering in Turkey.

Many of the continent’s biggest arms makers such as Rheinmetall, Safran, Airbus, Saab, MBDA and Leonardo were expected to send representatives to the meeting.

Airbus said: “We do not comment on the details of private, informal meetings.” Rheinmetall, MBDA and Leonardo declined to comment. Safran and Saab did not immediately respond to a request for comment.

Nato wants Europe’s arms makers to help meet Trump’s demands for more spending on defence as the bloc seeks to address his anger over the alliance’s perceived failure to support his war against Iran. The investments are also aimed at reducing the continent’s reliance on the US amid rising concerns about Washington’s commitment to the region.

At last year’s Nato summit in The Hague, members agreed to Trump’s call to increase defence spending to 5 per cent of GDP. Focusing the Ankara meeting on arms deals would demonstrate the impact of that announcement and allow Trump to claim credit, said officials briefed on the preparations.

“It’s about making the defence spending increase look more real,” said one of the officials.

Rutte wants Europe’s defence companies to invest rapidly without waiting for significant new government orders.

European arms companies and defence ministries have clashed in recent years over the root cause of the continent’s lack of military production. Companies have accused governments of not signing enough long-term procurement contracts, while states argue the sector has failed to increase production capacity quickly enough.

Despite those tensions, Rutte also wants to hear from the companies about the barriers to increasing production to meet Nato’s needs, said two people in the industry.

While European groups have moved to address ammunition shortages, access to long-distance missiles is now one of the main problems for European capitals.

Berlin is trying to buy American Tomahawk cruise missiles to bolster its defences against Russia, an effort that has become more urgent after the Pentagon scrapped plans to deploy its own equipment. At the same time Europe is pressing domestic companies to accelerate plans to develop alternatives.

The Pentagon in early May announced plans to withdraw 5,000 troops from Germany amid a spat between Trump and Chancellor Friedrich Merz over the Iran war. That conflict has also caused the US to burn through “years” of critical munitions.

Both developments served as fresh “wake-up calls” to Europeans about the need to quickly bolster their production capacity and capabilities, some of the people said.

If European Nato allies hit the 5 per cent spending target, it would amount to a combined $1tn increase in annual defence expenditure in 2035 compared with 2024.

Nato officials say they want headline agreements in key areas where European armies rely heavily on the US: air defence, long-range missiles and intelligence and surveillance capabilities such as space satellites.

Some of the companies will present plans next week to address the need for more factories and personnel, securing crucial raw materials and strengthening supply chains, while one of the people added that talks would also discuss how to reduce dependence on Chinese and Taiwanese components.

“The secretary-general regularly meets with industry and financial institutions from across the alliance to encourage increased production, innovation and investment to meet our capability needs,” a Nato official said.

STOCK ANALYSIS

Smart Money 13F × Q1 2026 Earnings | May 16, 2026

GOOG/GOOGL — Q1 EPS $5.11 vs $2.63 BEAT +$2.48 | Rev +21.8% YoY Buffett tripled GOOGL (17.85M→54.25M), added new GOOG. Third Point, Lone Pine, Himalaya all in. Altimeter exited — poorly timed. Signal: STRONG BUY. Consensus validated.

META — Q1 EPS $10.44 vs $6.67 BEAT +$3.77 | Rev +33.1% YoY Tiger Global, Third Point, Altimeter all added. ValueAct trimmed modestly. One of the cleanest buy-and-beat stories of the quarter. Signal: STRONG BUY. Validated.

AMZN — Q1 EPS $2.78 vs $1.63 BEAT +$1.15 | Rev +16.6% YoY Ackman added aggressively (9.61M→11.45M). Tiger Global held 10M. Lone Pine exited — looks like an error. Signal: BUY. Ackman & Tiger validated.

NVDA — Last Q EPS $1.62 vs $1.54 BEAT +$0.08 | Rev +73.2% YoY Altimeter (8.1M→9.34M), Tiger (11M→12M), Soros added. Third Point near-fully exited (2.95M→190K). Signal: BUY with split. Buyers look more right.

AVGO — Last Q EPS $2.05 vs $2.03 BEAT +$0.02 | Rev +29.5% YoY Tiger, Third Point, Druckenmiller, Discovery all initiated. Lone Pine exited — lone dissenter. Signal: BUY. Broad institutional consensus.

TSM — Q1 EPS $3.49 vs $3.30 BEAT +$0.19 | Rev +40.6% YoY Tiger added (3.7M→5.6M), Altimeter added. Lone Pine cut heavily (3.05M→1.39M). Signal: BUY. Tiger & Altimeter validated vs Lone Pine.

MSFT — Q3 FY26 EPS $4.27 vs $4.05 BEAT +$0.22 | Rev +18.3% YoY Gates exited (7.69M). Lone Pine, Third Point, Tiger all sold. Ackman bought new 5.65M — stark contrarian. Stock +3% today on CNBC report. Signal: DIVERGENCE. Ackman contrarian buy, watch closely.

UBER — Q1 EPS $0.72 vs $0.69 BEAT +$0.03 | Rev slight miss | +14.5% YoY Altimeter added sharply (+42%, 5.59M→7.97M). Signal: BUY. Altimeter conviction validated on EPS.

APP — Q1 EPS $3.56 vs $3.44 BEAT +$0.12 | Rev +58.9% YoY Lone Pine near-doubled (0.78M→1.46M). Tiger trimmed. Signal: STRONG BUY. Lone Pine's best call of the quarter.

INTC — Q1 EPS $0.29 vs $0.02 MASSIVE BEAT +$0.27 | Rev +7.4% YoY Tiger (new 1.6M), Druckenmiller (new 411K) both initiated simultaneously. Signal: TURNAROUND BUY. Simultaneous elite initiation + huge beat.

DAL — Q1 EPS $0.64 vs $0.58 BEAT +$0.06 | Rev +9.4% YoY Buffett new position 39.81M shares — extraordinary given his historical airline aversion. Druckenmiller exited before Buffett bought. Signal: BUY (Buffett). Druckenmiller wrong on timing.

NCLH — Q1 EPS $0.23 vs $0.14 BEAT +$0.09 | Rev +9.6% YoY Elliott new 13.19M shares. Signal: BUY. Elliott bought ahead of a clean beat.

HPE — Q1 EPS $0.65 vs $0.59 BEAT +$0.06 | Rev +18.4% YoY Elliott added aggressively (18.63M→27.42M). Signal: BUY. Elliott validated.

FISV — Q1 EPS $1.79 vs $1.57 BEAT +$0.22 | Rev flat YoY Jana Partners doubled (2.25M→4.44M). Signal: BUY. Jana's best call — big beat.

KMX — Fiscal Q4 EPS $0.34 vs $0.20 BEAT +$0.14 | Rev -1% YoY Starboard new 6.2M. Signal: ACTIVIST BUY. EPS beat validates entry point.

CPNG — Q1 EPS -$0.15 vs -$0.09 MISS -$0.06 | Rev +7.5% YoY (decelerating) Altimeter exited 15.68M, Lone Pine exited, Druckenmiller cut 6.8M→2.7M. Tiger Global massively added (26.3M→34.6M). Signal: CONTESTED. Sellers validated by miss. Tiger is the contrarian — biggest single divergence of the season.

RIG — Q1 EPS -$0.03 vs $0.08 MISS -$0.11 | Rev +19.3% YoY Elliott new 15.63M. Oil at $105/bbl today. Signal: SPECULATIVE. Revenue beats; EPS misses. Elliott playing offshore drilling cycle + oil price surge.

TRIP — Q1 EPS -$0.11 vs -$0.07 MISS -$0.04 | Rev -4.0% YoY Starboard added (9.6M→10.8M), Einhorn new 1.56M. Soros exited. Signal: ACTIVIST ONLY. Soros right to exit. Starboard & Einhorn playing restructuring/M&A.

LUV — Q1 EPS $0.45 vs $0.47 MISS -$0.02 | Rev +12.8% YoY Elliott cut massively (-41%, 51.13M→30.35M). Signal: EXIT. Elliott right — activist campaign stalling, miss confirms.

TOST — Q1 EPS $0.20 vs $0.27 MISS -$0.07 | Rev +21.9% YoY ValueAct near-doubled (8.02M→12.9M). Signal: ACTIVIST LONG-TERM. EPS miss near-term headwind but rev growth solid. ValueAct playing operational improvement.

PTON — Q1 EPS $0.06 vs $0.08 MISS -$0.02 | Rev +1.1% YoY Einhorn added aggressively (0.25M→10.11M, +40x). Signal: HIGH RISK TURNAROUND. Einhorn making a very large bet on recovery.

WULF — Q1 EPS -$1.01 vs -$0.20 MASSIVE MISS -$0.81 | Rev -1.1% YoY Lone Pine new 19.92M (biggest new position). Signal: PURE SPECULATION. Power assets & crypto infrastructure thesis — not an earnings story.

HLT — Q1 EPS $2.01 vs $1.98 BEAT +$0.03 | Rev +9.0% YoY Ackman exited 3.03M. Lone Pine added modestly. Signal: MIXED. Ackman sold a beater to rotate into MSFT.

ARM — Q1 EPS $0.60 vs $0.58 BEAT +$0.02 | Rev +20.1% YoY Altimeter new 1.72M. Signal: BUY. Clean beat, AI chip royalty story.

SNOW — FY Q4 EPS $0.32 vs $0.27 BEAT +$0.05 | Rev +30.1% YoY Altimeter reduced. Tiger maintained. Signal: HOLD. Beat but growth decelerating.

Q1 2026 13F Season Rankings | May 16, 2026

Bottom line: Buffett and Jana were the sharpest this quarter — both bought into stocks that subsequently delivered strong beats. Altimeter and Elliott showed disciplined conviction with earnings validation on most moves. The biggest open debate is Ackman (MSFT contrarian buy) vs. the crowd, and Tiger vs. consensus on CPNG. Both will be resolved next quarter.