The artificial intelligence hype has provided a second wind for some of the megacap technology stocks – Microsoft Corp., Nvidia Corp., Meta Platforms Inc., Alphabet and Amazon.com – that have been dominating market performance for most of the past four years. But if a new research report by Scotiabank strategist Hugo Ste-Marie is accurate, the dominance will soon come to an end.
Mr. Ste-Marie pointed to an improving OECD U.S. Leading Economic Indicator index to argue that the world’s largest economy is shifting from a recovery to expansion phase. The expansion phase is typified by solid gains for equities thanks to strong earnings growth.
The expansion phase is also characterized by broad market leadership. More stocks generate strong earnings growth and the best returns come from buying earnings growth at the lowest price – the definition of a value market.
A value market would draw investor assets out of the megacap…
