Learnings from Earnings

US 4Q 2025 earnings closed on a strong note, with broad-based upside to expectations but clear leadership from tech, communication services, and financials. Beneath the headline strength, an unprecedented AI capex cycle is reshaping the opportunity set, powering “picks and shovels” suppliers across semiconductors, memory, hardware, and industrial infrastructure while also raising questions about return timing and cycle durability.

At the same time, the US consumer is proving resilient yet far more deliberate, favoring value and essentials over big-ticket discretionary spending and reinforcing a more selective stance within retail and housing-linked names. Globally, dispersion remains high: Europe leans on financials amid muted growth, Japan benefits from rate normalization and AI-related demand, while select emerging markets – especially China – are shifting toward earnings-led stories anchored in innovation.

For advisors and investors alike, this backdrop argues for nuanced sector rotation within US equities and targeted global exposure to AI beneficiaries, quality financials, and innovation-driven franchises rather than broad market beta.