Tatton Asset Management says stocks grow cheaper as earnings outpace share prices
SPY•Tatton Asset Management says stocks are becoming cheaper as earnings growth outpaces share prices, challenging claims of an AI valuation bubble. It says third-quarter U.S. earnings growth is on track to exceed the second quarter.
1. Earnings and valuations
Tatton Asset Management says stocks are becoming cheaper as earnings growth outpaces share prices, challenging claims of an AI valuation bubble. It says third-quarter U.S. earnings growth is on track to exceed the second quarter, supporting equities despite weak investor sentiment.
2. AI and credit concerns
Meta’s investment plans in AI have renewed concerns about unsustainable, debt-fueled growth despite strong quarterly earnings. Tatton says major Silicon Valley companies’ credit spreads remain significantly below the S&P 500 average, limiting evidence of broader credit stress.
3. Sentiment outlook
Tatton says a recovery in investor sentiment depends on sustained earnings growth, while further declines in bond yields could provide additional support.
