AI wrecked havoc across financial markets, just not how many imagined (NOTW#79)
Best Anchor Stocks has a partnership with Fiscal.ai (the research platform I personally use), through which you can enjoy a 15% discount on any plan. Use this link to claim yours! You’ll find KPIs, Copilot (a ChatGPT focused on finance) and the best UX:
Both indices were down again this week as AI continues to wreak havoc across financial markets. Many thought that AI would impact financial markets by making them more efficient, but up to now (and we’ll only know if this is the case in hindsight), the reality seems to be quite the opposite!
Without further ado, let’s get on with it.
Articles of the week
I published two articles this week. The first one discussed Amazon’s earnings and I also made the case for Big Tech.
The market’s bipolarity and the case for Big Tech
Just 6 months ago, Amazon reported Q2 earnings that “spooked” the market and caused the stock to drop significantly post-earnings. The market’s worries revolved around AWS and Capex:
The second article of the week was my earnings digest on Medpace.
It's Part of the Plan
(Medpace is a company I profiled in May of 2025. You can read the in-depth report here)
The company reported very strong earnings but management decided to downplay these quite significantly. I explain why I believe this is part of a plan.
Without further ado, let’s see what the markets did this week.
Market Overview
Both indices were down again this week:
The market has been pretty crazy over the last few months (I know I am not saying anything new here). AI is (supposedly) disrupting entire industries weekly, and the market is being ruthless: even when there’s a small hint of potential disruption (whether rational or not), the market shoots first and asks questions later. This shouldn’t be surprising considering that the market hates uncertainty and, like it or not, AI does introduce uncertainty into the equation and questions the terminal value of many businesses. The fact that AI is advancing fast and that AI labs are very promotional with the objective of raising money in private markets, makes the “problem” worse.
Several industries suffered the AI disruption narrative this week (SaaS is a recurring protagonist in this theme) like ratings/data. Moody’s (MCO) and S&P Global (SPGI) dropped quite considerably:
Earnings season is always interesting, but more so when joined with potential AI disruption! No matter the reason for missed earnings, the market is likely going to extrapolate it to “AI disruption” if the company is in an area adjacent to technology. It’s undeniable that this dynamic of indiscriminate shooting presents “risks” and “opportunities.” The risk is that all earnings misses will probably be understood as AI disruption and companies will probably be deemed guilty until proven otherwise. The opportunity, evidently, is that a lot of companies that are not going to be disrupted by AI are going to be sold anyway.
To add fuel to the fire, it seems like a lot of market participants (different from algos) are increasingly being driven by momentum and narratives. This means that a stock can go from being hated to loved without anything changing in just a few weeks/months. Always worth noting that noise is always the highest when stocks are going down, and lowest when they are going up. In reality it should work the opposite way because risk is the highest as the price goes up (assuming the thesis has not changed materially).
The industry map was (as almost always) mixed this week:
The fear and greed index worsened and is now in fear territory:
I fully sold out of a position
This week I fully sold out of one position. I explain why in the company specific news section: