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Good morning. Restaurants have found a new magic trick. Shrink the burger, then make it look bigger (opens in a new tab). At Chicago’s Copper Club, the patty dropped from 8 ounces to 7 1/4, buried under fried onions and lettuce to protect what the owner calls “price-value perception.” Ground beef now averages over $7.15 a pound, the highest on record, while cattle herds sit at decades-low levels. Sales are climbing anyway. Maybe the secret to a happy customer was never the meat — it was the height.
Finks update: If you haven’t tried it yet, Finks (opens in a new tab) is our AI financial assistant for researching investments, analyzing your portfolio, and working through financial decisions. Three chats a day felt too limiting on the free plan, so we replaced the daily cap with 15 chats per week — giving you more room to get things done in one session. Start a chat here (opens in a new tab).
Top Idea
AI Bubble Fears Are Growing. Earnings Keep Pushing Against the Case
AI stocks have learned to levitate with ankle weights on. Growth shares are still beating value even as higher Treasury yields make their future profits harder to justify. That tension has revived fears that the AI trade is drifting into bubble territory
Rates vs. dreams: Growth stocks usually shine when rates fall because much of their value depends on profits years into the future, but that relationship has changed. The 10-year Treasury yield hit a 2026 low (opens in a new tab) in late February before climbing sharply after this week’s Fed hike. Still, the Vanguard S&P 500 Growth ETF has comfortably beaten the Vanguard S&P 500 Value ETF. Investors are paying steep prices for future growth despite higher yields, putting more pressure on earnings to justify those valuations. So far, they have delivered.
- Since late February, Vanguard S&P 500 Growth ETF has returned 15.2%, beating value by 9.9 percentage points.
- During the dot-com peak stretch, S&P 500 Growth outperformed value by 8.2 percentage points as yields climbed.
Earnings Keep The AI Trade Alive
Goldman Sachs Group sees earnings strength where bubble fears see trouble. S&P 500 profits surged about 30% (opens in a new tab) in each of the first two quarters, powered by AI spending and a stronger economy. Goldman expects that pace to cool, but profits should keep climbing, giving expensive AI stocks room to grow into their valuations rather than depend on prices rising alone.
- Consensus forecasts have S&P 500 earnings growing 19% in 2027 and another 17% in 2028, keeping the profit cycle firmly in expansion.
- Goldman expects earnings to rise 11% next year and sees the S&P 500 gaining 14% to ~8.7K as profits continue to support the rally.
Pressure valve: Bond-market stress may already be releasing some excess from the AI boom. Neuberger's Jeff Blazek said the S&P 500 forward price-to-earnings ratio has dropped from 22.9 (opens in a new tab) last October to 19.09. The Magnificent Seven's collective multiple fell from about 33 to 23. As BlackRock's Wei Li puts it, "The bar for taking risk is rising as rates reset higher, making the durability of earnings more important." The AI trade can survive higher rates, but only if profits stop floating on hype and start carrying the weight.
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Large-Cap Recap
Berkshire Confronts a Post-Buffett Era
Warren Buffett is stepping down as chairman of Berkshire Hathaway, handing the role to his son Howard Buffett while Greg Abel continues as chief executive. That leadership shift arrives as the conglomerate sits on a $365.5B cash pile and trails the broader market in 2026. Abel has already started deploying capital through a $4.5B stock buyback and a $6.8B deal for Taylor Morrison, testing whether the legendary model can maintain its edge. [Read (opens in a new tab)]
Apple Takes Its Chip Strategy Beyond the iPhone
Apple is developing enterprise AI servers powered by custom M8 Ultra chips to expand beyond consumer devices. Bloomberg reported that the hardware will target inference rather than model training for businesses and developers. That push could position the iPhone maker against established data center giants. Meanwhile, networking technology from Nvidia remains essential for connecting large processor clusters. The planned server launch is not expected before 2029. [Read (opens in a new tab)]
Netflix Faces New Engagement Hurdles
Netflix faced a downgrade from Wells Fargo as analysts questioned engagement trends and the streaming leader's ability to produce standout original content. Viewership averaged 1.6 hours per subscriber daily, falling ~8% from prior periods. Meanwhile, Walt Disney maintains a stronger hit-driven narrative across its content slate. Investors must watch whether streaming giants can protect user engagement without inflating production budgets or relying on expensive sports rights. [Read (opens in a new tab)]
Market Pulse
Marathon Digital Holdings, Inc.
The bitcoin miner’s shares surged after Morgan Stanley nearly doubled its price target as confidence grew around MARA’s AI data center pivot.
HubSpot, Inc.
The software company’s shares fell as rising Treasury yields and profit-taking pressured high-valuation software stocks after Thursday’s rebound.
Pershing Square Inc.
The asset manager’s shares rose as investors focused on fee growth and recent portfolio updates, extending the stock’s sharp September rebound.
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Markets & Economy
Bitcoin rally defies rate hike and regulatory hurdles: Bitcoin jumped 5.7% despite the Federal Reserve’s rate increase and the Senate’s rejection of the Clarity Act. A new SEC exemption for tokenized stock trading platforms added fuel to the rebound. [Read (opens in a new tab)]
AI fears send cybersecurity stocks higher: CrowdStrike, Palo Alto Networks, and other cybersecurity stocks posted strong weekly gains. Warnings about AI-powered cyberattacks strengthened expectations for security spending. [Read (opens in a new tab)]
On takes its fight to Nike and Adidas: On Holding signed Kylian Mbappé to lead its expansion into soccer after his 20-year relationship with Nike. The move gives On a global star as it enters the competitive soccer market. [Read (opens in a new tab)]
Business & Tech
Disney names first companywide chief technology officer: The entertainment giant hired former Character.AI executive Karandeep Anand as its first CTO. He will oversee technology, infrastructure, data, and AI across streaming, parks, and products. [Read (opens in a new tab)]
Wendy’s franchisee Meritage files for bankruptcy: Meritage Hospitality Group filed for Chapter 11 protection owing Wendy’s $24.9M in deferred fees. Declining sales and rising beef prices pushed store margins to a 30-year low. [Read (opens in a new tab)]
NASA considers new missions for Boeing’s Starliner: NASA is reportedly discussing 10 or more future missions with Boeing, despite Starliner’s troubled 2024 test flight. The spacecraft could remain a second US option alongside SpaceX. [Read (opens in a new tab)]
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Digit of the Day
Investors Pull $23B From Stocks as Higher Oil Prices Revive Inflation Fears
Wall Street’s mood swung hard into risk-off mode this week. Global equity funds shed $23.21B (opens in a new tab), their steepest weekly retreat in nine months, as crude oil surged to four-month highs and stoked fresh inflation fears. Add in Wednesday’s Fed hike, and the exit doors got crowded fast — but stocks weren’t the only casualty.
- US equity funds extended their losing streak to four straight weeks, bleeding $31.44B (opens in a new tab) — with large-cap funds alone accounting for $28.71B of the damage.
- Even conventionally safe money market funds got swept up, losing $77.42B in a single week — snapping a two-week streak of inflows.
The inflation cookbook: This week’s exodus didn’t come out of nowhere. It was the latest chapter in a rotation investors started months ago (opens in a new tab). As stocks and cash sold off, short-term Treasury funds gathered over $9B in August, commodities funds pulled in $11B, and gold notched inflows in nine of the past ten weeks. That’s inflation hedging in real time, and nobody’s folding this hand while the Fed keeps more hikes on the table
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The AI Bubble Could Pop. Is Your Portfolio Ready?
Strong earnings have helped AI stocks withstand higher rates and repeated bubble warnings. But expectations are already high, leaving little room for companies that fail to turn heavy spending into lasting profit growth.
Watch the earnings: Revenue growth alone is not enough. Investors should look for stronger margins, rising cash flow, and proof that AI spending is generating real returns.
Know your exposure: AI risk extends beyond chipmakers into index funds, software firms, utilities, and data centers. Your portfolio may be more tied to the trade than it appears.
Here’s what we’re asking Finks to prepare: