☕️ Earnings boom, indices zoom: what’s next for markets?

Howdy! 👋 

The markets look set for another day of record-breaking territory. 

Excellent! 

Earnings are hot but the charts are hotter. 

Profits are always found at the edge of absurdity. 

Here’s my playbook. 

1 – Worried about a correction? Know this before you bail 

Loads of people are. 

Yet, right on time and exactly as I said would likely be the case on national TV two weeks ago when doom and gloom ruled the roost, the markets were powering higher. (Watch) 

You’re not alone if you’re worried about a correction. 

Here’s the thing. 

The markets always follow two things sooner or later… earnings and sentiment. 

Roughly 1/3rd of the S&P 500 has reported this season and of that 87% have beaten earnings while 83% have beaten revenues. The blended earnings rate is 9.2% if it holds, the 9th consecutive quarter. 

This isn’t rocket science. 

The S&P 500 is notching new highs because innovation powers profits. 

Wannabes and permabears constantly focus on being right, which is a lot like predicting 10 of the last 2 actual pullbacks. The world’s most successful investors, on the other hand, focus on being profitable no matter what happens. 

Three guesses who’s consistently in the winner’s circle, and the first two don’t count. 

My point is that it’s okay to be concerned, but there’s no need to be stupid about it. 

• We’re right in the thick of earnings season 

• The Fed’s teeing up rate cuts 

• AI’s still in early innings; heck, it’s still writing the rulebook 

• There’s still $7T+ looking for a home (in great stocks) 

• The Government reopens at some point 

• China-US tensions easing 

Could there be a shakeout before the next move higher?  

Absolutely. 

In fact, I hope we get one. 

The markets require buying and selling to work properly. 

Which means that you’re ahead of the game and 99% of all investors if you understand that. 

Keith’s Investing Tip: Change up your tactics if you’re worried. That way you can continue to line up profit potential and invest in optimism rather than cower in fear while letting your emotions screw up your outlook. I’ll be here if you need me. 

2 - Apple and Microsoft join Nvidia in the $4 trillion market cap club  

People have argued with me for years. 

…About valuations 

…About the law of big numbers 

…About how narrow the markets are getting 

…About how big companies couldn’t possibly get any bigger 

Yet, that’s exactly what’s happening. 

Today both Microsoft and Apple crossed $4T and investors who own both are likely grinning ear to ear.  

I know I am. 

So’s the One Bar Ahead® Family. 

3 – Microsoft owns commercial AI until the robots take over 

OpenAI just wrapped up its long-awaited recapitalization, turning itself into a hybrid: the OpenAI Foundation (nonprofit) now controls the new OpenAI Group PBC, its for-profit arm.  

Here’s where it gets interesting. 

Microsoft now owns about 27%, a stake worth roughly $135 billion, and OpenAI is locked into buying $250 billion worth of Azure services. (Read) 

This deal does two things most investors don’t understand. 

First, it tightens Microsoft’s grip on the AI stack and locks in its path to monetizing enterprise demand. Anything built on OpenAI’s API? Exclusive to Azure. Everyone else in AI still pays rent to Redmond. 

And second, Microsoft keeps the IP rights to OpenAI’s research until “AGI” — artificial general intelligence — is verified, which means that Microsoft owns the AI commercial layer until the robots take over. 

Keith’s Investing Tip: AI will go down as the greatest investing theme in recorded human history, a statement I have made repeatedly over the years including during major network appearances like this one with the super-savvy Kelly Evans more than 2 years ago before that thought had crossed into the mainstream narrative. (Watch)   

If you have this covered, great! If not – and a lot of folks don’t - I'll be here.   

4 – Amazon’s layoffs are the tip of the iceberg 

Amazon’s at it again. 

This time laying off 14,000 corporate workers, the biggest corporate downsizing in its history. (Read) 

The official line?  

“We’re getting leaner so we can invest in AI.” 

What’s really happening? 

Amazon’s replacing expensive humans with cheaper algorithms. 

CEO Andy Jassy says it’s all part of Amazon’s “biggest bet since the Internet,” with $100 billion earmarked for AI development this year.  

I agree. 

For better or worse, businesses everywhere are learning they can do more with fewer people. And Wall Street loves the math despite the very human cost of what’s happening as thousands of hard-working people are “optimized” out of existence in the name of efficiency. 

Ironic, isn’t it. 

For a company that loves to talk about innovation, Amazon spends an awful lot of time playing catch-up. 

Keith’s Investing Tip: Own the innovators, not the imitators, something the OBA Family – who have been consistently ahead of this for a long time - understands very, very well. 

5 – PayPal just end-ran the Metaverse 

PayPal stock popped roughly 14% after announcing a deal with OpenAI to become the first payments wallet integrated into ChatGPT. (Read) 

Starting next year, you’ll be able to buy things directly inside ChatGPT — and merchants will be able to sell there, too.  

So much for El Zucko’s dreams inside the Metaverse. 🤦‍ 

Imagine, “Hey ChatGPT, find me a vintage Omega Speedmaster” could soon end with you actually buying one. 

CEO Alex Chriss called it “a whole new paradigm for shopping.”  

My take is simple. 

This is a super smart and potentially very, very profitable move. 

PayPal wants to be the money mover inside AI’s brain — powering payments for a future where AI doesn’t just recommend products but also seamlessly completes the checkout for you. 

The partnership instantly connects PayPal’s global merchant network to OpenAI’s 700+ million weekly users, giving ChatGPT built-in access to verified buyers and sellers without having to build that infrastructure from scratch. 

PayPal also beat top and bottom lines, raised its full-year earnings forecast, and announced its first-ever dividend — $0.14 per share, a 10% payout ratio.  

Time to buy? 

I see this as PayPal’s revival moment after years of being labelled “old fintech.” 

MyPOV is that the company is pivoting from pandemic-era growth bloat to profitability and relevance in AI-driven commerce where it suddenly looks a lot like an essential bridge between humans, bots, and business. 

Keith’s Investing Tip: Every once in a while, an old dog learns a new trick that actually matters. PayPal embedding itself in AI-driven commerce — and paying you to wait — could be one of those moments. Watch the execution. In fintech, there’s a fine line between “integrated” and “disintermediated.” 

Trade Idea: Buy PayPal but short Visa and Mastercard at the same time. It could take a while to play out but seems to me the handwriting is on the wall unless one of the biggies counters PayPal’s game-changing move. 

Hmmm 😎 

Bottom Line 

People ask me about hot stocks frequently.  

Wrong question.  

Ask yourself which stocks will be there when you need 'em and work backwards. 

It’s a very short list. 

BTW, if you’d like some help narrowing the field, you may find One Bar Ahead® interesting. Many folks tell me it’s made a huge difference in how they approach the markets and in the success they’re enjoying. You can learn more here. 

As always, let’s MAKE it a great day.  

You got this – I promise! 

Keith 😀