New York morning trade geopolitics are front and center of the major US stock averages in the red, but the volatility and memory has been a key story in the past few weeks while chip makers to struggle.
JP Morgan analysts suggest investors by the Morgan Stanley advisors think traders should be in hybrid scalers.
Now AI infrastructure spending is outpacing demand by a 4 to 1 margin, while some estimates estimates capbacks could break trillion by the end of the decade.
And as we see companies such Amazon using bond sales to raise funds for the buildout.
Now competition from emerging Chinese rivals to pose a growing threat to high flying chip stocks, with analysts warning of major disruption to the semi-industry over the next 2 to 3 years.
Well, if we look at other market sectors, we see around 8% rallies in healthcare as well as financials over the past month and an emerging tailwind for financials could be the IPO boom thanks to revenue fees.
We could get a glimpse into this when the big banks report earnings next week.
Following SpaceX's mega launch last month.
Well joining us to break all of this down is Lauren Cassidy, CIO and founder ETFs.
Lauren, good morning.
Thank you so much for joining me.
Yeah, thanks for having me.
Well, here we are.
We have kicked off the second half of 2026 and what a year it has been so far.
So first, I do want to zoom in on the tech trade.
So what are we seeing underneath the hood when it comes to this sector, particularly with the AI trade?
Yes, with AI we've had this.
Same leadership all year long, mostly in semiconductor chips as well as memory, where we're going to have a shortage for the next 18 months or so.
What we see is a broadening out.
We're already starting to see signs of that, and I think there's going to be greater participation across the entire AI ecosystem from security to software to observability.
There's many other areas where we're going to have long term winners.
Yes, and Lauren, as we head into the second.
Half of this year we are counting down to earnings season, of course we're paying attention to the results we get from some of the Max 7 names as well as hyper scalers and other AI plays.
But what do you think we should be focused on when it comes to the AI trade, especially since there has been so much focus on Cap?
Yes, so I think Capex is a very important part of the story, but I think we should give the founders making these large investments a little more credit.
What they're truly.
Building are long life assets that are going to be free cash flow positive and generate free cash flow for decades to come.
And I think one thing to pay attention to, for example, this last quarter Oracle actually had operating margin expansion, so it went from 43% to 45%, almost 200 basis points higher.
I didn't expect that to happen, but it's an indication that customers are paying for the services they're providing.
And that gives me greater comfort that these founders, we can trust them to make the right investments for the long run.
And I think you mentioned a key term there, and that is founder-led companies.
Of course it's 2026.
We just had SpaceX go public, and that has been one founder-led company IPO that all of us have been closely watching.
But there are others coming down the pike, including Anthropic as well as OpenAI.
So separate the.
Noise from the signal.
What is the reality when it comes to founder-led companies, in particular IPOs?
Yes, so in addition to the companies you name, we also have Andrell, Data Bricks.
We have a ton of very large, exciting businesses that are going to be coming into the market.
Founder-led businesses is actually my area of expertise, so we invest in founder-led companies for the Founders 100 ETF. and over very long periods of time, Bain and Company actually did some independent research and it showed founder-led businesses within the S&P outperformed non-founder led companies by 3x over 25 years.
They did a subsequent study in the following 10 years they outperformed 2X in just that limited amount of time.
So past performance is no guarantee, but we think Founders is a rich, wonderful area.
To invest and in addition to what happens with founder-led companies when it comes to artificial intelligence, there have been concerns about job loss here in the US.
So what is the reality when it comes to AI and jobs?
Yes, when you look back in history at all the innovation waves that we've had as a country the past 250 years, so we had the steam engine, electricity.
Modern manufacturing led by Ford, we had computers come on the scene, the internet, and now AI, and each time there were fears that we would lose jobs and it would be very disruptive in a negative permanent way.
But each time the country experienced a period of transition, which is what we're in now, followed by a longer period of prosperity and actual net job creation.
I think Kevin Warsh said it best last week when he said, who knew the internet would lead to a million.
Uber jobs.
There's industries that we believe are going to be created by our founders that people haven't even anticipated yet.
And actually there was a recent study by Ramp and Leo Labs that showed companies spending the most on AI actually ended up increasing their headcount by 10% over the following two years versus companies that weren't big investors and their headcount was flat and Lauren.
Before I let you go, we have a little over 60 seconds, so I do want to hone on that stat that you mentioned.
So founder-led companies are your area of expertise, but you say that traditional ETFs actually completely miss out on some of the stock outperformance.
So what's the secret sauce?
Yes, so actually, to your point, at Founder ETFs, we did a study of the top 300 largest US equity ETFs and found that on average only.
12.5% of their businesses are led by an original founder still at the helm serving as a chief officer, so most people would be surprised to know that they're very, they have a light exposure to founders and so that's why we created FFF.
Well, that are some very interesting stats there.
So thank you so much.
A lot of food for thought.
I appreciate your time today, Lauren, as well as all of your insights.
Thank you.
Thank you.
