The S&P500 has rallied 16% since the March 30 lows.
10 stocks have been responsible for almost 70% of this rally, with Alphabet $GOOG and Nvidia $NVDA alone accounting for 25% of the whole index’s returns. Source: Negligible Capital
$GOOGL trades at 133x free cash flow.
For context: its pre-COVID multiple was ~20x. And free cash flow hasn't grown since 2021. GQG Partners — one of the world's top institutional investors — just published a full research note titled: "Not Much Alpha Left in This Bet." Their three concerns: 1. AI is cannibalizing Google's core search revenue. Over 50% of searches may now end without a single click. No click = no ad impression. 2. CapEx is exploding. Google Cloud's capital spending now exceeds the revenue it generates. $175–185B in CapEx planned for 2026. Google Cloud generated $ 59B in revenue in 2025. 3. Advertising is cyclical. When the economy slows, ad budgets are the first to be cut. The last time this happened — 2022 — the stock fell 40%. Is Alphabet priced for perfection ? Source: Thierry from arvy @ThierryBorgeat
BoA says "say goodbye to the 'equity shrinkage' bull case since the early 00s":
"a confluence of factors systematically reduced available public equity year after year – more buybacks, longer private incubations, more takeprivates, low rates, ample liquidity, etc. "Today, an issuance deluge may be imminent: the three largest private companies represent >$2tn (though market cap included on indices may initially be lower flow, low-float stocks based on rules/proposals from index providers such as Nasdaq and Russell) Source: Neil Sethi
We might soon have several $5T+ market cap companies...
Note how Alphabet is closing in on Nvidia in the battle for the world's most valuable company Source: companiesmarketcap.com
Hedge funds are offloading Magnificent 7 stocks at an UNPRECEDENTED pace:
Hedge fund net exposure to the Mag 7 is down to ~17% of total North American net exposure, near the lowest in 3 years. At the same time, the top-most purchased stocks by retail investors last week were Alphabet, $GOOGL, at +$273 million, Micron, $MU, at +$243 million, and Tesla, $TSLA, at +$234 million. This was followed by Meta, $META, at +$210 million and Intel, $INTC, at +$197 million. This means hedge funds are effectively offloading Mag 7 exposure directly to retail buyers. Wall Street is dumping tech stocks to retail. Source: Global Markets Investor, Morgan Stanley
Wall Street projects hyperscalers’ free cash flow to fall by over 70% from its peak by the end of 2026, even as earnings keep climbing
Source: Christophe Barraud, Bloomberg
BBG's Authers: "It might be unfair to call this a dash for trash. "
But nobody seems to care about quality. This is from Bloomberg’s Factors To Watch service, showing the results of buying the top 20% of stocks by a factor while shorting the worst 20%. "Since Liberation Day, buying quality stocks has been a one-way ticket to losses." Meanwhile, Momentum has been performing strongly. Source: Bloomberg, Neil Sethi
🔴America's valuation premium over Europe is historically WIDE:
The S&P 500 trades at a forward price-to-earnings (P/E) ratio of ~21 times, while the Stoxx Europe 600 trades at ~14 times. This brings the valuation gap up to ~7 points, the widest since at least the 2008 Financial Crisis. This comes as the Middle East war exposed Europe's structural vulnerability to energy shocks, turning what looked like attractive valuations into a value trap. At the same time, the US benefited from its relative energy independence and surging tech sector. Source: FT, Factset, Global Markets Investor
