Friends,
Thursday, July 2nd, is the exact halfway point of 2026 (we did the math, trust us). And when times like this arrive, it's always fun to do some reflecting and projecting forward. So here's what things look like from where we sit.
Three Mega-Themes from 2026...so far
Three stories have been driving the markets over the past six months. Each of them is important in their own right, but each of them affects the others as well.
Claude Cowork Attacks SaaS
βIn January and February, Anthropic released several different versions of Claude Cowork for specific industries. As early adopters started tinkering with the tools, the entire future of the Software-as-a-Service (SaaS) industry came into question.
The iShares Tech-Software ETF (IGV) fell more than 25% by mid-April. But some SaaS companies, particularly vulnerable to these tools, fell even more. Today, shares of HubSpot, Atlassian, and Wix are all more than 70% below their all-time highs.
The U.S. and Israel Attack Iran
βAround the same time (late February), Operation Epic Fury commenced with bombings on Iran that took out the country's supreme leader. The price of a barrel of oil nearly doubled to $120 -- but has since retreated to about $75 following the signing of a tenuous cease-fire agreement.
Raging demand from AI
βAmidst all this, the world's biggest companies (Amazon, Google, Microsoft, Meta, Oracle) continue to pour investments into AI infrastructure. They are expected to spend over half a trillion dollars on AI capital expenditures by year's end.
A few well-positioned stocks (particularly Micron and SanDisk) have benefited from supply shortages amidst this demand -- making many stocks multi-baggers over just a few months.
Three Metrics We're Watching for the Rest of the Year
Unsurprisingly, the three things we're watching at a macro level are closely related.
SaaS revenues re-accelerating
βWe have long argued that not all SaaS companies are built the same. Some are particularly exposed to AI (here's looking at you, Chegg), while others could actually see revenue growth rates re-accelerate.
We've already seen some signs of this in certain companies (CrowdStrike, Cloudflare, Shopify, to name a few), and we'll be watching closely to see if this continues.
The price of oil...and inflation
βIt's no secret that high gas prices can lead to inflation. And high inflation can lead to higher interest rates. And in general, that's not great for stocks.
While there are lots of moving pieces, we think the price of a barrel of oil and the Core CPI inflation (sitting at $75 and 2.9%, respectively) will tell you how much of a problem this becomes.
In general, if oil stays below $80 and inflation doesn't creep above 3.0%, that would be a welcome scenario for investors.
The 2027 capex plan
βFinally, we can't avoid the fact that the massive spending from hyperscalers is driving a lot of the economy right now...especially in Middle America, where data centers are being built.
It's likely that when these companies start reporting third-quarter earnings in the fall, they'll offer some guidance as to their spending projections for 2027. If those projections are stagnant or fall, it could be good news for those companies (whose investors are hoping for a focus on profits), but bad news for those benefiting from supply/demand imbalances.
The opposite is true if we find out that spending will continue to grow unabated.
If that seems like a lot to follow...it is! While it's educational and instructive to follow these trends, it's also not paramount to being a winning long-term investor. Just focus on the things you can control -- buying wide-moat, mission-driven companies at reasonable prices -- and you'll likely do just fine over the only timeline that matters: the long run.
Wishing you investing success,
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Brian Feroldi, Brian Stoffel, & Brian Withers
Long-Term Mindset
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