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Bits, Bytes And Bubbles
A few days ago, I explained why the AI "bubble" label may be a misleading characterization of the US equity market.
Long story short, there's some evidence to suggest the rally's broadening out and depending on how you slice and dice performance, you can show a market that's leaning more towards cyclicals than "safe" bond proxies and so on.
I don't necessarily buy it, but I try to present both sides of every debate where possible. Sometimes I go out of my way in that regard. For example, I end
I think that another, equally relevant question is where is the positive inflection aka acceleration in revenue and earnings growth. If a sector has flat or negative 1Q growth or margins, but either revisions are positive or 2Q is expected better than 1Q or both, then the currently dour 1Q is less important.
I will refresh my screens for this after 1Q earnings. My recollection is that, last time I checked, the picture was broadly positive.
Okay, in S&P 1500 list as of 4/8
– 63% have positive NTM EPS revisions over past 3 mo, 34% have negative revisions.
– For small cap (mkt cap <$5BN), 52% positive and 42% negative. For mid cap ($5BN – $20BN), 69%, 29%. For large cap (>$20BN), 78%, 22%.
On 12/31/2023, these numbers were
– 54% positive, 42% negative
– small 46% 46%, mid 58% 40%, large 65% 35%
This is just one measure, but on this measure I think revisions look broadly positive and have gotten more so in last few months.
thanks, John L.
Rare to see a typo on Goldman’s first chart!