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This week’s briefing wrestles with a question that refuses to be settled: are we in an AI bubble, are we priced for perfection, or has the narrative already quietly inverted? Three pieces shaped my thinking, and each takes the question from a different angle.
Cullen Roche argues there is a “bubble in bubble calls.” His claim is empirical, not rhetorical. Corporate profits as a share of GDP sit near record highs, the AI trade is the driver, and in his framing high valuations are warranted as long as that chart stays elevated. To his credit, he acknowledges that when expectations surge the margin for error thins and sequence risk rises. Where I part company is on the conditional itself. Mean reversion in profit margins is one of the most reliable patterns in financial history. Treating the current margin level as the sustainable baseline, and capitalizing it at premium multiples, is precisely the move that has historically marked the most punishing entry points. The time to pay up on multiples is when margins are depressed and earnings are understated, not when both are stretched.
Dan Rasmussen and Chris Satterthwaite sharpen that concern from a different angle. Invoking Mordecai Kurz’s “correlated beliefs” framework, they note that the semiconductor complex now trades at roughly 55x earnings, which implies 16.5% EPS growth for a full decade. About 75% of the present value of the global semi industry is derived from cash flows beyond year ten, in territory clouded by deep uncertainty. Microsoft itself disclosed on its Q1 2026 call that two-thirds of recent capex went to CPUs and GPUs with three to five year useful lives, so the hamster wheel is spinning fast. Shiller’s CAPE sits at 42x, within a whisker of the 44x peak in late 1999. The conclusion, that those who underwrite the first $5 to $10 trillion of AI capex may not capture the hoped-for returns, lines up with everything we know about prior capital cycles, and it is the right caution to hold in mind.
Logan Shearer offers what I found perhaps the most actionable frame. He calls it Bizarro World. Software names that were left for dead two or three years ago, with Adobe collapsing from 60x EV/EBIT to roughly 11x, now sit at depressed multiples with stable growth and stable margins, while the picks-and-shovels beneficiaries of the AI buildout have enjoyed simultaneous growth, margin expansion, and multiple expansion. Shearer’s instinct is classically value: buy mispriced fear, avoid mispriced hope. He warns against the capital cycle error of paying up at the top of the spending curve, and reminds us that tacit knowledge, the kind that separates a hobbyist from a professional, remains a moat the LLMs have not yet breached. That is exactly the orientation I would commend to long-term value investors today.
Rasmussen and Shearer point in compatible directions. Verdad sets the macro guardrail by quantifying just how much future growth is already in the price of the AI complex. Shearer turns that observation into a hunting ground by identifying corners of the market where fear has been mispriced and the capital cycle is working in the patient investor’s favor. Roche is correct that the AI trade has real fundamentals underneath it, and he is right to push back on lazy 1999 analogies, but the conditional at the heart of his argument, that today’s elevated margin level will persist, is precisely the assumption the historical record warns against.
The rest of this week’s briefing brings the data: activist 13D filings, fresh spin-offs, micro-cap Tiny Titans, names trading near 52-week lows, and the cheapest broad-universe stocks on P/TBV and three-year EV/EBITDA, alongside the highest three-year FCF and earnings yields. Read it with these three frames in mind.
A few words on the format
The Briefing is designed to answer a deceptively simple question. If you were sitting down before the weekly market open, as an investor rather than a trader, what would you want in front of you?
Each week, the Briefing walks through four parts.
Weekly Review & Outlook covers equity performance, sector moves, the earnings just reported, and the earnings coming up, alongside curated editorial highlights from our Weekly Inspiration newsletter.
Idea Generation surfaces candidates from screens we run: biggest decliners, names near 52-week lows, low multiples, high FCF yields, spinoffs, activist situations, buybacks, short interest, and more.
Market Valuation & Positioning steps back to the index level: the Buffett Indicator, aggregate multiples versus history, S&P 500 concentration, equal-weight versus cap-weight, and long-run factor returns.
Macro & Fixed Income rounds out the picture with rates, credit spreads, the Fed balance sheet, the dollar, labor, regional PMIs, and housing.
A bit of feedback
“Loving these Monday briefings!” —Jon Bartel
“Most of what I monitor, all in one place. Great value add.” —Brad Lummis
“A great piece and thoughtfully assembled.” —Brian Wolf
“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis
“Worth its weight in gold.” —Shree Viswanathan
The new issue is attached below. We welcome your suggestions for improvement as we refine the format week to week.
