Gnosly

Source: Joseph Carlson (X)

Source: Ivana Delevska, Spear (LinkedIn)

One after another, yields are soaring into the double digits on bonds and loans funding the AI infrastructure buildout. Bankers are finding it more difficult to offload risk to insurers and other investors

As Israelis flocked to the polls to elect a new parliament, the Israeli military continued carrying out strikes on the Gaza Strip despite a year-long “ceasefire”. In its latest daily update, the Health Ministry in Gaza said one person was killed over the past 24-hour reporting period, with two others succumbing to their wounds from previous Israeli attacks. Since the October 2025 “ceasefire”, at least 1,568 people have been killed and 5,649 wounded in Israeli attacks, according to the ministry. A further 845 bodies have been recovered. The cumulative toll since the genocidal war began stands at 74,564 killed and 175,770 wounded, according to the Gaza Health Ministry.

Source: Richard Farr (X)

Source: fredlambert (X)

Source: McwilliamsBen (X)

Source: Mikkel Rosenvold (X)

In Q1, as Claude Code took off, fears of AI disruption triggered a “SaaSpocalyse” in software stocks, while hyperscalers came under pressure from ballooning capex budgets and mounting concerns about free cash flow.

Then Q2 brought booming expectations for agentic AI compute demand, sending semiconductors soaring 50% and hardware nearly 30%. By Q3, software was back in favor (+29%) as earnings held up and disruption fears eased, while the increasingly acute power bottleneck helped power stocks rally.

Now higher rates, AI financing concerns, and questions about returns on all that spending are weighing on sentiment.

A few things to keep in mind:

📉Stocks have gotten cheaper, even as the market rallied. The S&P 500 is just over 1% off its highs, despite its forward P/E falling from around 23x to below 19x. Semiconductors now trade at just 15.4x forward earnings.

💰The earnings outlook is pretty remarkable. Consensus expects S&P 500 earnings to grow 16% in 2027 and 17% in 2028, versus a 7.6% average over the past 25 years. S&P profit margins are sitting near 16%, too.

📊The U.S. economy is on track for roughly 6% nominal GDP growth this year, providing a healthy backdrop for corporate revenues. Earnings expectations are also broadening: materials, industrials, and health care are all expected to deliver double-digit growth over the next 12 months.