The Fork in the Road
Huge Retail Buying
Retail investors have been buying stocks at a record pace so far in 2026.
The YTD demand has been unprecedented.
Institutions Selling in Size
Meanwhile, institutions are doing the exact opposite, with outflows reaching near-historic levels. Bank of American institutional client outflows were the third highest since records began in 2008. last week.
Who will be right: retail or hedge funds?
Hyperscaler Capex vs. Apple
An amazing chart from A16Z shows the parabolic capex spend from Microsoft, Google, and Meta. Apple of course has decided to sit-out on the “AI arms race”.
CIO Think Big-Tech is Over-Investing
CIOs are now saying companies are “over-investing” in Capex. With big-tech crushing their own free cash flow, beginning to issue huge amounts of debt, and buyback less stocks, of course this makes sense why investors would want them to hit the brakes… The question is - do investors realize the implications of a Capex slowdown?
CIO are long…. Capex?
Those same investors are boat-load long everything that benefits from Capex and economic growth! Commodities, materials, utilities, industrials, their portfolios are completely dependent on more Capex!
We have come to the fork in the road.
Hyperscaler stocks are now falling on elevated spending targets, only Capex beneficiaries are rallying. This is added pressure on CEOs of big-tech firms to reconsider spending plans.
It Begins
After the market close on Friday, it was reported OpenAI is walking back 2030 guidance numbers. This is where the risk is. Once big-tech equities started falling it was only a matter of time before the huge “commitments” and spending budgets started to be walked back.
Nobody’s portfolio is positioned for this.
Watch out for downside risk in the coming weeks.
The best places to hide over the next month are likely to be Treasuries.
Apple didn’t sit out by accident, they are not a company that leads in this phase. They only polish the last 10% while others innovate. It’s reflected in every technology they have ever been successful with.
It’s fascinating to see retail and institutions on opposite ends of this trade, especially with OpenAI walking back guidance.
Do you think a significant CapEx slowdown in Big Tech would trigger a sector rotation into the “old economy” beneficiaries mentioned, or would the resulting hit to growth bring the whole tide down together?