Historic Disconnect Between Prices and Predictions

Historic Disconnect Between Prices and Predictions

The S&P 500 is showing an unprecedented divergence, with earnings estimates rising 8% over three months even as the index has fallen 8%. This is a phenomenon not seen since at least 1990; in a nutshell, Sherwood News reported, “the S&P 500 has never been down this much when earnings estimates have risen by this much”. The disconnect reflects investor concerns over oil flows through the Strait of Hormuz as well as a broader uncertainty around artificial intelligence (AI) capex returns.

EVs Could Do Well Out of this War

Rising fuel prices are boosting interest in electric vehicles (EVs): test drives, ad views and used model sales are surging. China’s BYD [BYDDY] is a key beneficiary, the Financial Times reported, with UK ad views up 77% and used searches jumping over 375%. “The tide is turning on the volatile nature and over-reliance on fossil fuels and we are now starting to see ‘pump anxiety’ replacing ‘range anxiety’,” said Matt Galvin, head of Polestar’s [PSNY] UK business.

Gold? Not So Well

Gold edged higher earlier this week but remains on track for its worst month since 2008, down over 14% as rising energy costs dampen prospects for Fed rate cuts. A shifting rate outlook has pressured the asset, Seeking Alpha detailed, despite the fact that, as a non-yielding asset, gold traditionally does well in a low-rate environment. Silver has also declined sharply.

AI Agents Are Shaping the Future of Online Shopping 

Meta [META], Shopify [SHOP] and Walmart [WMT] are investing heavily in agentic shopping tools – from Meta’s AI-powered product carousel to Walmart’s Sparky assistant, which is already driving average order values approximately 35% higher than non-AI orders. However, as OPTO details, while the long-term opportunity is significant, the success of agentic commerce ultimately hinges on whether consumers are willing to delegate purchasing decisions to AI agents.

Lots of Action on the Data Centre Front

Alphabet’s [GOOGL] Google could co-finance a multi-billion-dollar Texas data centre leased to Anthropic, the Financial Times reported. Also in Texas, Microsoft [MSFT] has confirmed it will lease a 700MW data centre originally developed for Oracle [ORCL], which had planned to use the site in collaboration with OpenAI, but pulled out earlier this year. Lastly, Vertiv [VRT] is to invest some $50m in its facilities in Ironton, Ohio, and its main campus in Westerville, Ohio.

Novo Nordisk: AI Could Unlock Serious Value 

The pharma giant [NVO] is deploying AI agents to cut weeks or months off the start and completion of clinical trials, potentially boosting revenue by tens or hundreds of millions while reducing the need for new hires, said Chief Digital Officer Stephanie Bova in an interview with The Information. The company recently developed more advanced AI to audit and manage the trials themselves, using software from Germany-based AI startup Celonis.

Can Arm’s Pivot to Chipmaking Unlock $15bn in Revenue?

Arm [ARM] surged 16% after projecting that its newly unveiled in-house chip, the AGI CPU, could bring in $15bn in revenue by 2031, to a total annual of $25bn. The projection represents a sixfold increase over Arm’s $4bn in revenue for 2025. Built specifically for AI inference in data centres, the chip comes as demand for central processing units (CPUs) accelerates amid the rise of agentic AI. OPTO unpacks the news and its impact on the ARM investment case.