Investing Outside Big Tech, Oil Prices Rally, Powering AI Infrastructure 10/8/26

Amazon.com

Across the shows: 5 speakers in other episodes, 3 bullish and 2 bearish calls, past 30 days

• Mark Mahaney · Evercore ISIBullish

  Amazon is his top pick; hyperscaler free cash flow turns positive, likely visible in 2027.

  Mahaney makes Amazon his top pick now that Meta, his previous top pick, has rallied about 40%, which he says reduces its risk-reward. He is intrigued by Amazon's next product cycle, a Starlink competitor called Project Leo that he expects to go commercial in Q4. He sees Amazon as a vertically integrated AI play from chips and infrastructure through applications, with AWS accelerating and margins stronger than people think. He believes the market underappreciates the ability of hyperscalers to pull off a Microsoft-style move back to positive free cash flow, with visibility likely in 2027. He also says Amazon's core retail business has strengthened in survey work and that it is hard to see anyone taking share from it.

  “I also am really intrigued by the next product cycle for Amazon... I think the market may be under appreciating the ability of these hyperscalers to pull off their own Microsoft moment”at 24:28

Alphabet

Across the shows: 8 speakers in other episodes, 4 bullish and 4 bearish calls, past 30 days

• Mark Mahaney · Evercore ISIBullish

  Alphabet is a buy alongside Amazon: similar multiple, product and free cash flow catalysts in 3-12 months.

  Mahaney wants to be long Alphabet for the same reasons as Amazon. Like Amazon, it is a vertically integrated AI company from chips and infrastructure through to applications, using AI to increase advertising revenue and personalize shopping recommendations. Both trade at roughly the same multiple and have product and free cash flow catalysts he expects in the next three to twelve months. He has a slight preference for Amazon.

  “they both trade actually or roughly around the same multiple, and they both have product and free cash flow catalysts coming up, I think, in the next three to twelve months. So I wanna be long both stocks.”at 26:14

CarMax

• Michael Khouw · OpenInterest.PROBearish

  High used-car loan rates will squeeze CarMax's sales and inventory, so the stock looks strangled.

  Khouw says used-car loan rates are about 15% to 16%, based on St. Louis Fed data. Average loan terms run about 68 months, so roughly 30% of a used car's price could go to interest. He argues this pressures used-car sales. He points to CarMax's lower inventory turnover, a lengthening cash conversion cycle, and longer average time on the lot as evidence it is already being hit. He suggests a November options trade, selling the 50-strike puts and the 60-strike calls, to profit from the stock staying range-bound.

  “And I really think that CarMax much like the people who are shopping there has been strangled.”at 44:17

AI infrastructure & data centers

• David Zervos · Jefferies

  AI-driven capital demand is pushing up real rates, and that demand is a positive sign.

  Zervos sees strong demand to invest in AI technologies as one reason real global rates are rising, alongside central bank policy resets. He interprets that demand for capital positively: top US companies are willing to put their balance sheets on the line to bet on future US growth. He says this is a sign of confidence in growth rather than a source of inflation.

  “There's a demand to invest in the technologies that everybody's excited about in what we now call [AI], and that is putting pressure on global real rates.”at 5:09

• David Lefkowitz · UBS Chief Investment Office (UBS Financial Services Inc.)

  Hyperscaler AI capex keeps growing into 2027, benefiting equipment suppliers.

  Lefkowitz looks out to 2027 and expects continued growth in AI capital expenditure. He says this will be good news for the picks-and-shovels companies that sell equipment to hyperscalers. The view rests on hyperscaler spending plans rather than a specific figure.

  “When we look at '27, I think you're going to see continued growth in AI CapEx, and that's going to be good news for the picks and shovels guys, people who sell equipment to those hyperscalers.”at 30:39

• Bill Zartler · Solaris Energy Infrastructure

  Higher rates aren't slowing data center customers, who are still raising money for their build-outs.

  Asked whether higher rates are affecting the build-out, Zartler, CEO of Solaris Energy Infrastructure, said rates do not seem to be affecting any of Solaris's customers. The data center customers are out raising money today and evaluating projects. He ties this to the view that the market is still early in the build-out. Brian Sullivan had noted that hundreds of billions of dollars of debt are funding the build-out.

  “At this point, the rates don't seem to be impacting any of our customers. The customers are out raising money today and they're evaluating this.”at 38:31

US stock market outlook

• David Lefkowitz · UBS Chief Investment Office (UBS Financial Services Inc.)

  Stocks have more upside for the rest of 2026; bull market drivers remain intact.

  Lefkowitz expects more upside for stocks over the rest of the year because the drivers of the bull market remain intact. He cites very solid earnings and expects another good set of results in Q3 earnings season, not just from AI-levered infrastructure companies but also from consumer-facing businesses that will show resilience. He also expects AI capex growth to continue into 2027 and sees low job losses supporting consumer spending. He does not give a numeric index target.

  “Rest of the year, think there's more upside for stocks. I think the drivers of this bull market are still intact.”at 29:56

• David Lefkowitz · UBS Chief Investment Office (UBS Financial Services Inc.)

  Beaten-up financials and industrials offer value, but need oil and rate pressure to ease first.

  Lefkowitz says financials and industrials have been beaten up and represent the value in the market today. He says a true snapback in these areas requires some volatility to come out of the rates market and pressure to come off oil prices. The view is conditional on those macro conditions easing.

  “we need to see some pressure come off the oil prices to see a true snapback in some of these areas that have gotten beaten up, but that's in our mind where the value is today.”at 33:58

US Treasuries & yields

• David Zervos · Jefferies

  Global yield rise reflects central banks resetting rate paths, not a change in long-run inflation views.

  Zervos argues the rise in yields is a global phenomenon, not US-specific, driven largely by central banks responding to persistent headline inflation by no longer looking through it and resetting the expected path of short-term real rates. He supports this by noting breakevens and long-run survey inflation expectations have not moved much, and that the US has performed relatively well against Germany, France, Italy and Japan. He expects yields to come down once oil prices fall, arguing current real yields are high by historical standards and have room to fall, which would help rate-sensitive sectors. He concedes some of the rise is also driven by strong demand for capital tied to AI technologies.

  “there's a global shift higher in yields, and this has come largely from central banks that are responding to the inflation and the persistence of that headline inflation number.”at 3:06

US growth & recession risk

• David Zervos · Jefferies

  US economy has proven resilient to rate and oil shocks, a key story of 2026.

  Zervos says the biggest macro surprise of the year is how resilient the US economy has been to two large shocks: a roughly 100 basis point swing in rate expectations from two cuts priced to two hikes, and oil rising from about $60 to over $100. He says that in February few investors would have predicted record stock highs and roughly 15% year-to-date gains under those conditions. He concludes the economy can hang tough through an extended energy shock, and hopes for another 5-15% S&P rise with lower rates and energy prices, though he presents that as a hope rather than a forecast.

  “The biggest surprise this year for the macro world was how resilient The US economy was to the shocks that hit it.”at 6:37

Oil & fuels

• Bob McNally · Rapidan Energy Group

  Crude prices can't stay near $105; physical tightness and disrupted supply point higher.

  McNally says the market is climbing a wall of bearish complacency. Although the US military has restored most Hormuz flows and Red Sea workarounds, fixed energy infrastructure remains vulnerable to Iranian and Houthi attacks, and an open Hormuz does not help if oil cannot be produced, stabilized, transported and loaded. Physical Brent is about $135, roughly $30 above the December futures contract, because China cut crude imports by 4-5 million barrels a day and is now restocking, while SPR releases are winding down and Europe is doing little more. Refined products are very tight, with diesel and gasoline constrained, so crude must chase products higher. He sees only two ways down, a severe recession or a durable ceasefire, and neither is likely immediately, so the direction of travel is up. Prices would only drop into the $80s in an optimistic case.

  “So really, don't think we can hang here at 105. Things have to get a lot better for prices just to stabilize and begin to drop into the 80s.”at 13:14

AI: overall outlook

• Mark Mahaney · Evercore ISI

  Remains very bullish on long-term AI growth; the AI trade is intact despite OpenAI revenue news.

  Mahaney says he is very bullish on long-term AI growth because enterprise adoption is still in its early stages and consumer adoption is barely started, with consumer agents only a month old. He is not sure of the OpenAI revenue details, but says he would be surprised by any sharp negative inflection in frontier lab growth rates, and that nothing in the industry suggests one. He sees the revenue discrepancy as likely accounting differences, such as gross versus net presentation, and thinks the AI trade is still well intact.

  “I remain very bullish on long term AI growth just because I think enterprise adoption is still so early stage and consumer adoption.”at 22:54

US rates & the Fed

• David Lefkowitz · UBS Chief Investment Office (UBS Financial Services Inc.)

  Fed can be patient and won't cut soon; oil-driven inflation isn't labor-driven.

  Lefkowitz argues the Fed is still raising rates but with less urgency than in past tightening cycles. The Fed is worried about inflation from the oil shock, not from the labor market, unlike 2022 when wage growth was too high. Wages are growing around 3-3.5%, so the Fed can be patient and take its time without drastic action. He does not expect the Fed to cut initially, because it will want to see inflation wash through the system, including higher freight costs passed on in Q3 earnings.

  “They're not worried about inflation coming from, say, the labor market. That's a very different situation than we were in 2022”at 31:45

US consumer

• David Lefkowitz · UBS Chief Investment Office (UBS Financial Services Inc.)

  Companies may pass 1-1.5% of higher transport costs to retail prices; consumers can tolerate it.

  Lefkowitz expects higher transportation and freight costs to show up in Q3 earnings, with companies needing to raise retail prices by about 1%, perhaps 1.5%. He thinks the consumer can tolerate that, even though people are annoyed. He does not think this will crack the broader spending story, citing wages growing around 3-3.5%, which gives households some cushion.

  “I think we're talking about companies may need to raise prices 1% at the retail level, maybe one and a half. Which the consumer can tolerate.”at 33:32

Power demand & the grid

• Bill Zartler · Solaris Energy Infrastructure

  Gas pipeline access for data center power is a months-long bottleneck, not years, in non-municipal areas.

  Zartler says Solaris's power is natural-gas fired, and there is enough gas in place. The constraint is getting gas to the site. Pipeline bottlenecks come mainly from securing rights of way. As big data centers move to areas where rights of way are easier to secure outside municipalities, the bottleneck is months, not years. Zartler presents this as a site-selection factor for data centers.

  “as the big data centers migrate to areas where it's easier to get the right of way in non municipal areas, it's easier to get the right of way to lay a pipeline. The bottleneck for that is months, not...”at 37:09

Enterprise AI adoption & AI software

• Bill Zartler · Solaris Energy Infrastructure

  Business AI adoption is still nascent; Solaris is seeing growing use of AI tools internally.

  Zartler says the market feels very early in AI adoption. As evidence he cites Solaris's own operations, where use of AI and computer tools is growing in mechanics and maintenance and in information and HR systems. From this he concludes that industrial adoption of AI is just nascent and the tool is still evolving.

  “the market feels like it's very, very early in terms of the adoption. I can see it in our business. I can see the use of AI and the use of the computer tools, both growing in our operations... So I think we're just nascent in the adoption of this tool.”at 38:40