The New AI Trades

Bullish:

• $CYCLICALS - Cyclical stocks outperforming as economic growth accelerates with fading tariff headwinds and fiscal policy tailwinds

  • “Economists here at Goldman are forecasting that economic growth will accelerate in the 2026 as you get a fading headwind from tariffs, building tailwinds from financial conditions and fiscal policy, all of that will lead to above trend, above consensus, accelerating economic growth, and that is good for cyclical parts of the market”

    Ryan·11:31

  • “pockets of the market like consumer discretionary companies or transports or some of the industrial complex, those stocks are really driving markets higher, and we think there's probably room for that to continue if the macro environment continues to be friendly”

    Ryan·11:56
• $SMALLCAPS - Small caps outperforming large caps for first time in a while as part of market broadening theme

  • “the defining word of the 2026 market so far has been broadening. You can see that in the outperformance of non US equities versus US equities, small caps doing better than large caps for the first time in a while”

    Ryan·11:11
• $INFRA - Massive AI infrastructure buildout with hyperscaler CapEx rising from $540B to $660B in 2026, creating opportunities for infrastructure providers

  • “Following earnings season, where you had a couple of these companies announce big upside surprises to their CapEx numbers, that estimate is up to $660,000,000,000 So you've added $120,000,000,000 of incremental CapEx expectations in the span of a couple of weeks”

    Ryan·7:39

  • “The growth rate is now 60% in 2026 rather than thirty five percent at the start of the year based on analyst expectations. Our view is there's probably room for those numbers to keep going up”

    Ryan·7:53

  • “there are many supply constraints out there that is constraining some of that spending”

    Ryan·8:10

Bearish:

• $SOFTWARE - Software stocks experiencing massive derating from 35x to 20x forward earnings as growth expectations collapse from 15-20% to 5-10%

  • “A group of software stocks is down about 25% to start the year. Some of that selling pressure started earlier than 2026. These stocks are down more than 30% from their highs in October”

    Ryan·0:43

  • “a couple of weeks ago, these stocks traded at a forward earnings multiple of about 35x because of those attributes. As of the latest readings, they trade at about 20x forward earnings. So a huge valuation derating”

    Ryan·1:10

  • “investors have gone from valuing this group of stocks in the 15% to 20% growth range to 5% to 10 growth in the span of a couple of days”

    Ryan·1:40
• $PUBLISHING - Publishing and media sectors under pressure from AI disruption risk with industry-specific AI applications being rolled out

  • “We've seen big selling pressure in spaces like publishing, advertising, media, legal services, IT consulting services. Anything that's involved in data and services is really coming under pressure”

    Ryan·2:09

  • “it's clear that AI disruption risk is really the common thread throughout a lot of these industries selling off in recent weeks”

    Ryan·2:28
• $LEGALTECH - Legal services facing selling pressure after Claude's co-work tool launch with plugins targeting the industry

  • “You then had Claude's co work tool that had a bunch of plug ins related to some of these services industries that led to the selling pressure you saw in legal services”

    Ryan·2:58
• $INSURANCE - Insurance companies seeing selling pressure as AI tools emerge that can compare insurance quotes

  • “even as of the last day or two, you've seen insurance companies release products that can compare insurance quotes. And so you've seen selling pressure in insurance companies”

    Ryan·3:08
• $GAMING - Gaming stocks under pressure after Google's Genie 3 model release with gaming-related AI tools

  • “Google released its Genie three model, which had some tools around gaming. So you saw some selling pressure among the gaming and advertising stocks following the launch there”

    Ryan·2:48