| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
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ACR Alpine Capital Research warns of a double bubble in equity markets, with the S&P 500 cyclically adjusted P/E reaching an all-time high of 46.6 and earnings yield at a record low of 2.1%. The firm defines this as a bubble where returns implied by valuations diverge from investor expectations. While acknowledging AI as potentially revolutionary as the Internet, they express concern about massive capital investments by hyperscalers totaling $472 billion expected by 2026, which may challenge corporate return-on-capital. The firm's EQR strategy returned 15.9% gross in recent years, benefiting from volatility that allowed strategic cash deployment and profit-taking. ACR protects against valuation risk by maintaining portfolios with different characteristics from the broader market, trimming positions when prices exceed fundamental values. They expect fundamental reversion where P/E ratios eventually decline toward historical averages, though timing remains unpredictable. The firm views current elevated cash levels as prudent given extreme valuations.
Current market valuations represent a double bubble with the S&P 500 at historically extreme levels, while AI represents a revolutionary but capital-intensive technology that may challenge corporate returns despite its transformative potential.
The firm expects fundamental reversion where P/E ratios will eventually decline toward historical averages, though timing cannot be predicted. They remain cautious on asset prices due to elevated valuations relative to earnings, not due to forecasts of weak economy or disappointing corporate earnings.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 30 2026 | 2025 Q4 | AMZN, GOOGL, META, MSFT | AI, Bubble, P/E Ratios, risk management, technology, Valuations | - | AI LLMs are likely to be as revolutionary as the Internet, with massive capital investment by hyperscalers expected to reach $472 billion by 2026. Corporate… |
| Oct 30 2025 | 2025 Q3 | - | earnings growth, Equity Returns, fundamentals, Long-Term Investing, valuation | - | The firm highlighted equity valuations reaching record highs, with the S&P 500s cyclically adjusted P/E at 46x, while emphasizing that long-term returns are driven by… |
| Jul 31 2025 | 2025 Q2 | - | capital protection, diversification, Quality, risk, valuation | - | The letter centers on protecting capital through quality businesses, reasonable valuations, and disciplined diversification rather than attempting to time markets. Management argues volatility is not… |
| Apr 30 2025 | 2025 Q1 | - | - | - | - |
| Jan 31 2025 | 2024 Q4 | - | - | - | - |
| Oct 30 2024 | 2024 Q3 | - | - | - | - |
| Jul 31 2024 | 2024 Q2 | - | - | - | - |
| Apr 30 2024 | 2024 Q1 | - | - | - | - |
| Jan 31 2024 | 2023 Q4 | - | - | - | - |
| Oct 30 2023 | 2023 Q3 | - | - | - | - |
| Jul 30 2023 | 2023 Q2 | - | - | - | - |
| Apr 30 2024 | 2023 Q1 | - | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
ValuationsEquity valuations remain elevated with the S&P 500 trading near 23x forward earnings, well above its long-term average of 15.6x. High valuations may increase market sensitivity to earnings disappointments and tend to constrain longer-term returns, reinforcing the importance of selectivity. |
Multiples Premium Earnings Risk Selectivity | |
| 2025 Q3 |
CloudAmazon's positioning to benefit from both infrastructure and application layers of AI is highlighted. The company's logistical prowess represents one of the foremost moats in business and will be enhanced with AI through better orchestration of logistics assets and buildout of more sophisticated robotics. |
Infrastructure Logistics Automation Efficiency Coordination |
| 2025 Q2 |
CapitalProtection |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| AMZN | One company we own that we think has unique positioning to benefit from both the infrastructure and application layers is Amazon. Amazon's logistical prowess is one of the foremost moats in business today and it can and will be enhanced with AI. The company will do this in multiple ways, with better orchestration of its logistics assets and underlying cargo, as well as the buildout of more capable, sophisticated and robust robotics. Amazon is singularly well positioned to dominate the coordination layer, with AI's help, across its entire logistics network. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
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