A New Bull Rises
5 Idea Friday: Bull market, but not for everyone; Pareto Outcomes Embiggering; K-Shaped Oddity; Luxury Woes
a new bull rises
bull market, but not for everyone (aka saaspocalypse continues apace)
pareto outcomes, embiggering
k-shaped oddity
luxury woes
👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. 👋👋👋Random Walk has been piloting some other initiatives and now would like to hear from broader universe of you:
(1) 🛎️ Schedule a time to chat with me. I want to know what would be valuable to you.
(2) 💡 Find out more about Random Walk Idea Dinners. High-Signal Serendipity.1. A New Bull Rises
Once again with feeling, expectations for earnings growth are very bullish:
The upward revision to EPS estimates is an incredible thing to behold.
If we were coming out of a recession or something then maybe you could see expectations shift like that, but earnings were already pretty strong to begin with. It’s wild.
As for stock market prices themselves, well, it continues to be a tale of diverging fortunes, but semis (and memory) are having quite a run:
In terms of historic bullruns (unadjusted), semis are approaching Nikkei (in the 80s), Dotcom Nasdaq and post-WTO BRICs, in terms of scale.
As Random Walk has said many times in the past, eventually some of that spending on chips, etc. will have to flow through to the users of those chips, otherwise they will not keep spending quite so much money on chips.
But, for now, AI adoption is creating so much demand for chips, memory, and now CPUs, that the biggest spenders cannot get enough, and everyone knows it. And that’s how you get unprecedented upward revisions to earnings.
ICYMI
2. Bull market, but not for everyone (especially non-AI Tech)
Of course, if you’re not somehow in the AI infra supply-chain, you’re not doing bad—you might even be doing pretty well—but the market mostly doesn’t care.
Every sector, but Industrials and Staples, has underperformed the price action implied by its results.
Public software hammered
And no one has been having a harder time impressing the market than tech. For SaaSCos, especially, the bloodbath just continues apace.
Hubspot HUBS 0.00%↑ beat earnings and raised guidance:
And as a reward it got absolutely hammered:
Hubspot wasn’t alone.
Plenty of software companies met, exceeded and even raised guidance, but still got beat-up:
