AI Capex Surge, Record Corporate Optimism, and a Historic Storage Chip Windfall

Key Takeaways

1. AI capex is accelerating sharply: the five largest hyperscalers are projected to spend $789B in 2026, up 92% from $412B in 2025, with nearly $1.2T annually by 2029.
2. Corporate optimism is at a record: 72 S&P 500 companies issued positive Q3 EPS guidance, the most in FactSet history, while analysts see 29% Q3 earnings growth and a 9,275 S&P 500 target.
3. Market divergence is widening: AI-related stocks boom while the weakest US companies' credit spreads hit 12.15%, the widest in nearly four years.
4. Memory chip supply shortages are creating rare pricing power: Micron's net income grew 42x in two years to $38B, exceeding Apple's prior-quarter profit by $8B.
5. US households hold over $60T in stocks and mutual funds, triple the level a decade ago, supporting consumption but increasing vulnerability to asset price declines.
6. US Treasuries are on track for their worst decade ever with a -1.3% annualized total return, while US real estate stocks hit an all-time low relative to the S&P 500.
7. Capital is voting with its feet: Korean stocks rose 97% and Taiwan stocks 86% in 2026, while Chinese stocks fell 12%, one of the widest performance gaps on record.

1. AI Capex and Corporate Optimism

1. AI capital expenditure is accelerating at an unprecedented pace. Alphabet, Amazon, Meta, Microsoft, and Oracle are projected to spend $789B in 2026, up 92% from $412B in 2025, and their combined annual capex could approach $1.2T by 2029. Since December 2023, data center spending has increased by $4B while all other areas have decreased by $10B, widening the gap between AI and the rest of the economy. Investors will eventually demand returns on this spending. — via 1 2
2. Corporate optimism is at record levels. 72 S&P 500 companies have issued positive Q3 EPS guidance, the most in FactSet history and far above the five-year average of 42. Wall Street analysts' bottom-up 12-month S&P 500 target is 9,275, implying 20% upside, with Q3 earnings growth expected at 29%—the third consecutive quarter above 25%. — via 1 2
3. Market divergence is widening beneath the surface. AI-related stocks are booming, but credit spreads for the weakest US companies have widened to 12.15%, the widest in nearly four years, signaling rising risk. Meanwhile, US households hold over $60T in stocks and mutual funds, more than triple the level a decade ago; this wealth surge supports consumer spending but makes the economy more vulnerable to asset price declines. — via 1 2

2. Memory Chips, Treasuries, and Asset Performance

1. Memory chip supply shortages are creating rare pricing power. Micron's net income grew 42x in two years to $38B, which is $8B more than Apple's profit in the prior quarter. — via 1
2. US Treasuries are on track for their worst decade in history, with a -1.3% annualized total return so far in the 2020s, a reminder that "no default risk" does not mean immunity to interest rate and inflation risk. Over the past 30 years, US government debt grew 665% while the S&P 500 delivered a 1,820% total return; government borrowing may not hurt corporations in the short term (more borrowing leads to more spending and higher revenues and profits), but the long-term consequences are a different matter. — via 1 2 3 4
3. US real estate stocks have fallen to an all-time low relative to the S&P 500, erasing all their relative outperformance from the mid-2000s housing bubble. Nike is down 80% from its November 2021 peak, its largest drawdown ever. — via 1 2 3
4. Capital is voting with its feet: in 2026, Korean stocks rose 97% and Taiwan stocks rose 86%, while Chinese stocks fell 12%, one of the widest performance gaps on record. — via 1

3. Macro Data and Market Technicals

1. September ISM manufacturing and services readings softened but remained in expansion territory, with the two continuing to converge significantly. Both employment subcomponents rose, and the services employment subcomponent returned to expansion for the first time in three months. — via 1 2
2. The September ISM services paid-prices index rose to its highest since July 2022, with all 17 industries in the index reporting cost increases. New orders remained healthy and order backlogs hit a four-year high, pointing to solid demand and supply chain tightness. — via 1 2
3. The 3Q26 CFO survey from Duke University, the Richmond Fed, and the Atlanta Fed showed CFO optimism on the US economy and their own companies weakened slightly, with rising optimism among large firms offset by declining sentiment among smaller and financially constrained firms. CFOs cited monetary policy and inflation as their most pressing concerns. — via 1 2
4. ADP data showed private employment averaged 23,750 new jobs in the four weeks ending September 19, the fifth consecutive week of growth. The August trade deficit widened sharply to $105.6B, above the $102.1B expected and the prior month's $92.8B, the largest since "Liberation Day"; imports rose 4.3% and exports rose 1.4%. — via 1 2
5. Market technicals: the S&P 500 pullback and percentage of constituents outperforming; sector-level percentages of stocks at 4-week and 52-week highs, with more sectors finally showing life; basket stock performance; the rolling 1-month correlation between 10-year Treasury yields and the S&P 500 remains deeply negative; sector/index performance yesterday and month-to-date/year-to-date. — via 1 2 3 4 5

4. AI Products, Platforms, and Ecosystem Moves

1. Raoul Pal launched a personal AI avatar that integrates 15 years of X posts, all interviews, and all Real Vision writing to answer questions in his tone, free and open. He argues intelligence was once scarce and required scheduling meetings, but now can be called on demand, calling it the most personal implementation of the "Exponential Age." He also shared that the Exponential Age contains abundant alpha: AI intelligence scaling, markets moving on-chain, and machines becoming economic participants. — via 1 2
2. Raoul Pal called Verifiable Agent Arbiter (VAA) a major and much-needed development. The cited content says it launched with Google Cloud as an evidence layer allowing enterprises to prove their AI agent actions were authorized, using SuiNetwork and WalrusProtocol to anchor proofs. — via 1
3. Marc Andreessen shared an unofficial AI concert video with the theme song "And the Hero Will Drown" by StoryoftheYear, with audio AI-edited from the band's recordings and a disclaimer of no affiliation with the band. He also shared episode 2 of the "Succession Doomer Themed" series, titled "Sam And Dario Clear The Air." — via 1 2
4. Jason suggested Disney build a Marvel short-film creation tool into Disney+, arguing it would be very popular; the cited content is a Spider-Man vs. X-Men "mini-series" episode 2 made with Seedance 2.5 and PixVerse. — via 1

5. Investing, Wealth, and Society

1. Meb Faber highlighted Brazil's stock market characteristics: cheap, hated, in an uptrend and breaking out, and 18 years of no progress, calling it "just my style." The cited tweet said Brazilian stocks rose 14% that day, were the world's second-cheapest market at the end of Q3, and media attributed it to election results, but the cited author believes extremely low valuations were the key, like dry wood waiting for a spark, and noted this is often not good news, just going from bad to less bad. — via 1
2. Meb Faber quoted a view that a group of financial advisors who vacationed during the bull market summer will find emerging market value stocks up over 30% for two consecutive years while their own returns are 0%, potentially leading to panic buying at year-end. He also shared David Booth's investment maxim: "Everyone says past returns cannot predict future returns—then they go there and try to predict returns!" — via 1 2
3. Charlie Bilello noted that at a 10% return, the annual savings needed to become a millionaire by age 65: starting at 20, $1,400 per year; starting at 40, $10,200; starting at 60, $163,800. Time and compounding are investors' greatest advantages, so start early. — via 1
4. The wealth gap is at a record: the richest 0.1% of US households now own 15% of all household wealth, an all-time high, while the bottom 50% own just 2%. Last year, 42% of FHA homebuyers used down payment assistance, the highest share on record, as the housing affordability crisis reshapes the American Dream. — via 1 2
5. Los Angeles's "mansion tax," originally pitched to voters as taxing the rich and promoting housing construction, actually prevented 9,100 housing units from being built, reduced 16,650 full-time construction jobs, and caused $452M in lost fiscal revenue. — via 1

6. Health, Demographics, and Global Development

1. Data shared by Lyn Alden shows under-five child mortality from 1950 to 75 years later fell from 33% to 6% in Africa, 25% to 2.5% in Asia, 9.3% to 2% in Oceania, 21% to 1.5% in Latin America, 3.8% to 0.6% in North America, 10.5% to 0.4% in Europe, and 23% to 3.5% globally. — via 1
2. Elad Gil, who has a biology PhD background, believes progress in biology is slow and sleepy, with the last peak possibly CRISPR in 2012; he expects AI and closed-loop automation to change this, but also believes micro-funding, regulation, and structural adjustments could have brought change earlier. — via 1
3. Mohnish Pabrai said his second podcast for Korean listeners has been released and believes it has universal appeal. The Wagons Fund September conference call is available on YouTube, and the Pabrai Wagons ETF (WAGN on NYSE Arca) shareholder call replay from September 23, 2026, hosted by portfolio manager Mohnish Pabrai, has been published. — via 1 2 3