The market rally is shifting from AI suppliers to AI users, as companies broadly report significant AI-driven cost reductions, a trend since 2025. Retail, healthcare and fintech stocks saw the biggest revenue increases and expense reductions, and small caps are part of this "productivity melt-up." Rising token usage has offset some of the benefit as AI agents cost more to run, and with a stock picker's market on both ends, screening at the ETF level may be less useful. x.com  x.com  x.com  x.com  … Show more

AI savings agents threaten the deposit spread behind the four largest US banks' profits. Per a Jefferies report, UK firm Riff's agent automatically moves money out of zero-interest accounts; if it scales, such balances could fall 80% and deposit margins from 190 to about 20 basis points, a hit near 80% of major UK bank profits. JPMorgan, Bank of America, Wells Fargo and Citigroup earned $69B of net interest income last quarter, over double their profits. Jefferies calls it 'when, not if'. x.com  … Show more

European financial stocks look badly exposed to socialism, second-order effects from Iran and collapsing credit, so the short on European financials stays. @qthomp, often a sparring partner on tech, fully agrees here, and the FT reports, via @LiveSquawk, that hedge funds are making record bets against European stocks. x.com 

Apple, Microsoft, Amazon, Alphabet, Meta and Nvidia are valued like leveraged utilities because they swapped high-margin, capital-light models for hundreds of billions each in industrial-scale infrastructure with utility-like returns and billions in off-balance-sheet debt. The math works only if AI causes a productivity shock that eliminates 25% or more of white-collar jobs over the next decade. Cloud always needed capital, as @ramahluwalia notes, but not at this exponentially rising scale. … Show more

Amazon's profits should explode once capex settles because it is replacing human labor with AI and robots while bringing in record revenue. Enterprises will get more output per dollar from electricity and compute than from salaries, so the value of human labor trends toward zero. Amazon laying off employees while raising capex and posting record revenue signals that shift, which makes owning the companies doing the replacing the way to stay ahead. x.com  x.com  x.com 

Companies using AI to cut costs and expand margins are underpriced, and that efficiency trade is the same as the buildout trade because they all buy compute. AI margin gains show up in gross margin and headcount first. ServiceNow runs agentic AI internally, Salesforce grows revenue without headcount, Amazon sells compute and runs logistics with it, Alphabet cuts internal costs while owning the model and cloud, and Meta pairs flat headcount and rising margins with its own silicon. x.com