It's A New World Order For Markets | Cameron Dawson

Cameron Dawson says the AI buildout creates financing exposure as well as growth: frontier labs such as OpenAI and Anthropic need continued fundraising while costs rise as fast as revenue, and she says 40% of Microsoft's backlog comes from OpenAI. She also notes that Meta's off-balance-sheet leases are sensitive to a higher cost of capital and warns that unfilled AI infrastructure orders could have cascading effects.

Dawson says hyperscaler capex expectations for 2026 climbed from under 30% growth to nearly 100%, supporting semiconductor companies; she expects semiconductor earnings to grow over 100% this year, with margins expanding from 30% to 46%. She explains that semiconductor revenues are recognized while hyperscalers capitalize associated investment costs, and cites consensus expectations of 130% semiconductor earnings growth in 3Q as a contributor to 35% overall 2026 earnings growth.

Dawson says strong earnings have helped the market absorb consumer, rate, and oil-price headwinds: 2027 earnings estimates are up 17% year to date, with projected earnings of $420 per share a key benchmark. But she notes that consensus growth is expected to slow from about 35% in 2026 to about 15% in 2027, while the S&P 500's valuation has already fallen from 23 times to 19 times as the 10-year yield rose above 5%; slower growth could leave less room for further multiple compression.

Dawson describes a shift toward a hawkish Fed, with a rate hike already occurring and more expected, and says higher capital costs are exposing cracks among lower-quality borrowers. At the same time, she says financial conditions were as easy as in 2021 and capital markets remained open; triple-C spreads are above 10%, while high-yield spreads at about 346 basis points have risen from their lows but do not yet indicate the acute stress seen in past distress periods.