The blog post from last week got a good response over on www.seekingalpha.com. Being a one-man shop, when an article like that is contemplated, notes are furiously scribbled from the events of those days and as the list grows, it’s eventually pruned and a blog post is quickly tossed up.
Last week, this blog failed to mention General Electric (GE) and the “earnings smoothing” Jack Welch employed in the 1990’s, which left Jeff Immelt, Welch’s successor in a tough spot, one of many issues that Jack left Jeff Immelt that came home to roost in the early 2000’s.
One key part of last week’s blog post was the late 1990’s “tech market cap vs earnings (EPS) weight” which a lot of folks who weren’t around in the last 5 years of the late 1990’s may not have been aware of.
A key difference in those two metrics: Today, the tech sector’s market cap is roughly 37%, versus the earnings weight of 30.8%, per TJ Dhillon of LSEG, while in March, 2000, the tech sector’s market cap weight was 33% – 35%, while the earnings weight was just 13%.
For semiconductors and semi-cap equipment, which has been the tech sector’s juice this year, the semiconductors complex’s market cap weight is 18.7%, while it’s earnings weight in mid-May ’26 is 15.1%.
SP 500 earnings:
Still no slowdown in forward EPS estimates for the SP 500.
Notes the “rates-of-change” for 2026, 2027 and 2028.
Ford was up 11% this week and 20% the last 30 days. Similar to Tesla’s energy generation and storage line, Ford now has the same energy gen line of revenue, but while Tesla’s line item is 11% of total Tesla revenue, Ford’s is likely much smaller. (Haven’t seen a revenue breakout yet.) Morningstar recently boosted the fair value estimate on Ford from $16 to $18. Morningstar more focused on higher revenue generation and the $1 billion in costs coming out of the business annually.
Here’s a total return chart of Ford vs the SP 500 since 1/1/2000.
Ford closed Friday, May 22nd ’26 with a 4.02% dividend yield.
IBM
IBM rose 15% this week on the quantum investment decision by the US gov’t with IBM being one of the companies to receive the capital allocation. Both the US and IBM will put in $1 billion. Quantum is the next iteration after AI in terms of the tech “evolution”. IBM pulled back from just over $300 to recently holding support at $215. The $215 – $216 area was the all-time-high for IBM before it remained underwater until late ’24.
IBM will likely make another run at $300.
Summary: Surprised to see with earnings season done, the continued jump this week in the forward SP 500 EPS estimates. There is no discernable change in the trend in SP 500 EPS estimates.
Have a wonderful Memorial Day weekend.
None of this is advice or a recommendation, but only an opinion, or a perspective. Past performance is no guarantee of future results.
Thanks for reading.