Kobeissi Letter: AI-related Companies' Earnings Significantly Exceed Expectations
The Kobeissi Letter points out that companies with AI exposure are delivering unprecedented earnings performance.
S&P 500 companies currently have an average Q2 2026 earnings that exceed expectations by 27%, likely to become the strongest quarter in decades; Nasdaq 100 exceeds expectations by 55%; Bloomberg AI Value Chain Index exceeds expectations by 71%, covering chip manufacturers, cloud and data center operators, memory and hardware suppliers, network equipment providers, and companies supporting AI power infrastructure.
On the market side, demand for AI infrastructure and supply chains drives earnings significantly beyond expectations, with funds continuously flowing into chips, data centers, memory, and power-related assets; the strong outperformance reinforces valuation support for AI themes, with capital accelerating from traditional sectors to the AI value chain, benefiting related companies while lagging sectors face pressure.
Source: Public Information
ABAB AI Insight
The Kobeissi Letter has long tracked U.S. stock earnings and macro data, previously emphasizing the pull of AI capital expenditures on tech earnings; this data aligns with the high outperformance ratios reported by institutions like FactSet for Q2, where one-time gains from companies like Alphabet significantly lifted overall numbers.
In terms of capital pathways, the demand for AI training and inference drives continued expansion in capital expenditures for chips, memory, power, and network equipment, motivated by the need to seize pricing power in computing and infrastructure; this is reflected in related companies raising guidance and achieving significant outperformance, with funds concentrating further from broad tech into core segments of the AI value chain.
Similar cases can be seen in the early overperformance cycles of cloud computing in the 2010s, or in the memory and foundry segments of the semiconductor supercycle; current AI investments are transitioning from a narrative-driven phase to a profit verification and capital expenditure realization phase.
Essentially, this represents a restructuring of the supply chain driven by technological substitution: as AI demand transforms infrastructure from a cost center to a profit center, market mechanisms redistribute capital through unexpected earnings, concentrating pricing power among suppliers that control computing, memory, and power bottlenecks.
ABAB News · Law of Cognition
Outperformance is the true validation of fundamentals
The closer to the bottleneck in the value chain, the greater the earnings elasticity
Capital follows earnings outperformance