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Thought of the day

Investors focusing on individual stock movements may feel unsettled amid a flurry of earnings releases in recent days. AMD’s shares fell 17.3% after the chipmaker’s sales forecast missed consensus estimates, Qualcomm traded 9.5% lower after hours amid a lackluster revenue forecast, while Novo Nordisk slid over 17% following worse-than-expected guidance for 2026. Last week, Microsoft shares dropped nearly 10% as its cloud growth fell short of investor expectations, and software stocks came under heavy selling pressure this week amid concerns over AI disruption.

Conversely, Eli Lilly’s shares rose over 10% after it reported robust uptake of its obesity drugs, and Meta jumped 10.4% last week on revenue acceleration. The broader market, meanwhile, has been relatively calm, with the S&P 500’s 0.8% drop on Tuesday its biggest daily loss over the past two weeks. The MSCI All Country World’s steepest decline during the same period was 0.6%.

Without taking any single-company views, we believe the divergence in stock performance highlights the need for diversification. Equally important, in our view, is that details of these recent earnings results suggest that the structural trends of AI, aging demographics, and electrification remain intact. We continue to expect transformational innovation to be a key driver of equity market returns in the years ahead.

Markets are rewarding companies that can demonstrate tangible financial benefits from AI. Alphabet is the latest big tech company to highlight higher capital expenditures, with management’s 2026 guidance of USD 175-185bn well above consensus expectations. In fact, management still expects to be short capacity relative to demand this year. The durability of AI spending globally, in our view, has positive readthrough for the semiconductors and hardware segments, but we are also encouraged by the growing evidence of AI monetization. For example, Alphabet reported an acceleration in its cloud business, adding that the firm has several monetizable opportunities in the pipeline. Microsoft’s Azure division also reported a robust 38% growth for the December quarter, with demand outpacing available supply. We reiterate our conviction in the AI opportunity, but with markets increasingly focusing on monetization, investors should broaden their exposure to companies and sectors that can successfully generate revenues and profits from AI investment and adoption.

Products and services that support healthier, longer, and more active lives should benefit from global demographic shifts. Despite Novo Nordisk’s negative outlook due to competition and pricing pressure, we believe the global obesity market remains in the early stages of development. Nearly a billion people worldwide are living with obesity, and increasing drug supply and expanding patient access should underpin considerable growth in the coming years, in our view. We also believe developments in oncology, metabolic, and cardiovascular studies should draw continued investor interest, while demand for advanced nutrition, wellness, and beauty solutions tailored to age-related needs and aspirations should continue to grow.

Rising power and grid infrastructure demand globally should see continued spending. Recent results from companies across the power generation and electrification value chain are supportive of our Power and resources theme. For example, GE Vernova said demand for gas power was so strong that it has yet to find a ceiling on price, adding that “speed to power” is a top priority for data center customers. NextEra Energy also highlighted a record growth in backlog for power generation projects, describing business conditions as very supportive. The burgeoning activity in nuclear power should directly support key industrial and utility participants, while demand for high voltage electrical equipment has also continued to accelerate. We now expect total spending across the Power and resources value chain to exceed USD 32tr over the next decade, and we advocate that investors seek balanced exposure.

So, we maintain the view that structural shifts in AI, energy infrastructure, and health care will reshape industries and expand global profit pools, and we expect our opportunities aligned with these themes to offer durable, secular growth that should persist well beyond short-term market volatility.