US Equities - From Flows to Fundamentals

US equities experienced a significant positioning reset in tech and AI, yet underlying fundamental earnings growth remains strong. The report highlights increased dispersion and market volatility, suggesting tactical opportunities in long-volatility strategies and selective equity exposure.

Key Takeaways

• 1.The recent market weakness represents a positioning reset in tech and AI, not a fundamental rejection of the theme.
• 2.Q2 earnings expectations are strong with 22% consensus EPS growth, led by AI infrastructure names like MU and NVDA.
• 3.The S&P 500 is trading as a collection of stocks rather than one index, evidenced by record low correlation between equal weight and market-cap indices.

Table of Contents

• Prime Book: TMT (Info Tech + Comm Svcs) % of Overall Prime Book (MV)
• Prime Book: Magnificent 7 % of Total US Exposure (MV)
• Exhibit 1: The market has appreciated alongside positive earnings revisions
• Exhibit 2: Earnings revision breadth has received solid in most sectors
• Exhibit 6: Bottom-up consensus expects S&P 500 EPS grew by 22% year/year in Q2 2026
• Exhibit 14: We see upside to consensus 2027 hyperscaler capex estimates
• Exhibit 15: Revisions to 2027 hyperscaler capex growth should be concentrated late this year and early next year
• Exhibit 16: Hyperscaler revenue estimates were revised higher following strong Q1 results
• Exhibit 17: Hyperscaler earnings multiples have declined alongside surging FCF multiples
• US-Listed Levered/Inverse ETFs: Total Assets vs. Exposure
• S&P500 BTIC Total Return Futures: showing front month trading richest

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