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Spencer Jakab

Wall Street Journal, Heard on the Street / Markets A.M. newsletter

Quotes

What's holding up earnings is that you have these hyperscalers spending a lot of money, but it's only going through the P and L pretty slowly because they've extended the depreciation of all these chips and equipment and servers that they're buying. And its revenue, it's immediate revenue and profit for other people in the market... there's going to be hell to pay for that later on when it goes into reverse.

2026-06-30-podcast-the-compound-and-friends-steroid-era-with-spencer-jakab-the-f-s-going-on· 2026-06-30#steroid-era-earnings-inflation#mega-issuance-peak-to-ai-capex-derate

This professor at the University of Florida, Bao Lan Wang, looked at it and he said... It was equivalent to, let's say, about 12% of the first quarter's net profit. And his preliminary numbers say it's going to be 2 or 3 times as large for the second quarter.

Net margins were the highest they ever have been 14.8% for the S&P 500... once you strip out all these abnormal things, the stock market's pretty expensive and margins are unlikely to stay this high for that long.

If you hold the P E ratio constant and things aren't constant... then the market should be 25% lower. If you're justifying it based on those earnings.

Notes

Spencer Jakab

One-line summary: WSJ markets columnist (Heard on the Street; writes the Markets A.M. newsletter); tracked for earnings-quality and valuation skepticism on the AI cycle.

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