Ulin & Co. Wealth Management

The Record Stock Market Rests on Some Big One-Offs -There are two significant reasons earnings expectations have soared—and they are both probably temporary

The Record Stock Market Rests on Some Big One-Offs There are two significant reasons earnings expectations have soared—and they are both probably temporary.

Mega-cap tech just had its worst quarter since the financial crisis. Many of the largest tech names are down 20% to 50%.

Investors question whether massive AI spending will translate into durable earnings power, whether the Iran War may result in re-inflation, and if the ongoing tariffs debacle will also add headwinds to CPI.

The issue is not whether AI will matter. It will. Its not 1999.
The issue is timing and ROI and potential other headwinds on big tech.

Wall Street is asking whether hundreds of billions in data centers, chips, and infrastructure will generate meaningful profits or pressure margins for several years.

Competition is intensifying. Enterprise adoption is fragmenting across platforms as alternatives from OpenAI, Anthropic, Google, and others accelerate innovation cycles. Traditional software companies are also feeling pressure from what some are calling a SaaSpocalypse.

AI tools are disrupting legacy subscription models and pricing power. Recent private credit stress highlights another risk, as many smaller and mid-sized tech companies carry floating-rate debt, increasing sensitivity to higher interest costs as growth expectations reset.

Layer in geopolitics. Supply chains tied to energy, chips, and industrial inputs remain vulnerable if the Iran conflict extends. Oil shocks ripple through transportation, manufacturing, and food costs, raising the expense required to build and power large-scale data centers.

Helium supply is another overlooked constraint. It plays a critical role in semiconductor manufacturing and chip cooling. Prolonged disruption could slow AI infrastructure deployment more than markets expect.

Markets are adjusting to the reality that the next phase of returns may depend more on earnings growth than multiple expansion. While many economists and CIOs are touting Q1 as a fear based sell off - you may still want to buckle down a bit more as the Iran war continues.

We continue to emphasize diversified, all-weather portfolio construction rather than concentration in a single theme or trade.

Tech is down. Bitcoin is down. Gold is down. Financials are down. It’s feeling a bit, ominous out there like being in the eye of a storm.

As we’ve worked through disruption with our clients before & after the dotcom bubble crash from 26 years ago- Innovation cycles create winners and losers.

Strategic and tactical diversification allows participation without needing to predict which platform dominates. Our client balanced portfolios are fully deployed and staying on course- as market timing and panic are not long-term strategies

Leadership in markets rotates.
Strategy should not.

Microsoft closes worst quarter on Wall Street since 2008 on AI concerns: 'Redmond is in a pickle' With Microsoft losing almost a quarter of its value this year, investors have reset the company's earnings multiple to the lowest since late 2022.

US financial advisors brace for growing array of risks in second quarter- -Ulin with Suzanne McGee

A number find the parallel weakness in both stocks and bonds -- uncomfortably reminiscent of 2022, when both asset classes ended up in the red and investors found no safe haven -- is another big concern.

Simultaneous weakness in both stocks and bonds has exposed the limits of the ⁠traditional 60/40 ​cushion investors have counted on for decades," said Ulin

US financial advisors brace for growing array of risks in second quarter Investment advisors say a buildup of problems is weighing on clients, who are entering the ​second quarter of the year struggling with trying to predict the outcome of war, the direction of energy prices and the repercussions of ‌problems stemming from private credit.