Markets have a tendency to generate narratives when companies are in buyback blackout zones prior to earnings and we are seeing that again. Rates and inflation are known and markets have priced that in but the most recent narrative is AI overspend and have we reached peak earnings growth in AI. Many companies in the market are in bear markets and the market is actually cheaper now compared to January 1st, 2026. The forward multiple of the $QQQ was 25.4 on January 1st and is 20.9 today with 10 year historic average of 22.9. So who is wrong in this narrative? Time will tell but I bet earnings will throw cold water on this narrative from the big AI companies. Small businesses are struggling with these rates and their equities reflect that but good or bad, they are only a small portion of major indicies performance.
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