Oct 12 Update

The Kobeissi Letter

The gap between AI names and the rest of the market is historic:

Since the start of 2024, a basket of 42 AI stocks has generated 67% of the S&P 500's price return.

In other words, those names have contributed +22 percentage points to the index’s +33% gain over this period.

By comparison, the remaining 458 stocks have added +11 percentage points.

Additionally, those 42 AI stocks have accounted for 58% of the S&P 500's earnings growth and 81% of CapEx and R&D growth since the start of 2024.

The rest of the index has therefore contributed just 20% of total CapEx and R&D growth over the same period.

Meanwhile, just 29% of stocks have outperformed the S&P 500 over the last 3 years, close to the ~25% low recorded during the 2000 Dot-Com Bubble.

AI is all that matters.