Hello,

 

US earnings dominated much of the narrative last week, with capital expenditure (namely on AI) falling under the microscope. Despite beating earnings expectations, shares fell across several big names as companies were called to defend increased R&D spending. Having embarked on a year of ‘fiscal efficiency’ (read lower expenditure and job cuts) which drove the strong earnings, firms such as Meta are now seeing material increases in spending. It represents a tough balancing act for some companies, as they must continue to provide tangible, steady profits but also be seen in participating in the transformative theme of AI – which does not come cheap.

 

Alphabet’s strong results has led it to hitting the $2trillion valuation mark for the first time. We have often spoken to the size of individual US firms versus other global stock markets, but the same concentration illustrations exist within the US market. For example, the Materials, Utilities, and Real Estate sectors are all roughly $1trillion dollars each, which means Microsoft is currently larger than all three sectors combined. More food for thought for investors looking to manage the tradeoff between risk and return.

 

Also, a final call for our Investment Conference, which takes place this Thursday, 2nd May. Further details and registration available here.

 

As always, if you wish to discuss anything in this newsletter in further detail, please do get in touch.