April thirteenth, two thousand twenty-six
《A Potential Mispricing Zone》
《A Potential Mispricing Zone》
Author: Ariston
X ｜
I. What the market favors and what it avoids: a potential mispricing zone
Over the past period, the technology sector has experienced one of its weakest stretches of relative performance in the past 50 years. This pricing outcome stems mainly from two new concerns: 1) the market continues to question hyperscalers’ ROI, and 2) AI disruption risk is rewriting assumptions about the endgame for many technology subsectors.
What’s more, one of Wall Street’s hottest recent debates has been systematic skepticism about whether the “Magnificent 7” can outperform the market forever, Investors’ fears are focused on the risk of buying legacy giants like Kodak in the AI era, IBM, Nokia, and BlackBerry—companies whose business models were crushed outright by a new wave of technology. This is especially true of the software industry: terminal values, long supported by faith in sustained growth and low discount rates, are now being discounted seriously for the first time.
The result is declining correlation and greater dispersion within big tech:
Chart: Performance of baskets of different thematic trades during the war, during the ceasefire, and year to date
The chart above shows the performance of different baskets. Themes such as optical networking, data centers, storage, and memory have not only performed best YTD, but have also seen relatively limited drawdowns during the war and the fastest rebounds after the ceasefire. (Clearly, these are the market’s favored themes for continued buying on pullbacks.) In contrast, software, IT services, and the broader AI at risk category were heavily shorted during the conflict and faced even more intense short-selling after the ceasefire. In other words, a trend that persists within tech is the contrast between the certainty of the picks-and-shovels plays and the uncertainty of their practical applications. This can be expected to continue for the foreseeable future.
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At the same time, Could there be potential mispricing opportunities among the technology stocks that have been shorted, as well as in the broader universe of growth stocks outside tech?
There may well be...
Take GS’s Rule of 10 basket, for example. Excluding the most heavily shorted software stocks, the median current P/E of its non-software growth stocks is 29x, representing a premium of about 53% over the S&P median and already near the bottom of its range over the past decade. Meanwhile, consensus expectations for sales growth in 2027 remain 3 times the S&P median.
Those truly high-quality non-software growth stocks have seen their valuations fall substantially, but their growth has not collapsed:
Chart: A broad growth-stock universe offering a potential mispricing opportunity
If the macro backdrop ahead involves only a moderate slowdown in growth rather than a deep recession Then, within secular growth, the non-software growth-stock segment in particular will begin to regain appeal as an allocation.This segment shifts the focus from shock narratives to areas with real growth, supply constraints, and no direct replacement by AI.
Some assets have already demonstrated growth, but have seen their valuations cool significantly.
At this point, their expected returns are already better than continuing to chase a handful of core names trading at elevated levels:
(Be disciplined about entry and exit; don’t rush to buy the dip)!
Chart: AXON (daily chart, as of 260413)
Chart: CVNA (daily chart, as of 260413)
Chart: SMCI (daily chart, as of 260413)
Chart: DASH (daily chart, as of 260413)
Chart: ANET (daily chart, as of 260413)
Chart: PODD (daily chart, as of 260413)
Chart: META (daily chart, as of 260413)
Chart: UBER (daily chart, as of 260413)
Chart: ISRG (daily chart, as of 260413)
Chart: TPL (daily chart, as of 260413)
Chart: NFLX (daily chart, as of 260413)
Chart: LLY (daily chart, as of 260413)
Chart: AMZN (daily chart, as of 260413)
Chart: DXCM (daily chart, as of 260413)
Chart: BXS (daily chart, as of 260413)
II. On compute constraints: Why they are far from over
The broader industry view is that compute constraints are far from over.There is still nowhere near enough compute. Bottlenecks extend from wafer fabs, data center permitting, power, and memory all the way to labor, and these constraints are unlikely to disappear quickly in the foreseeable future. This means that AI infrastructure is not a theme that will be fully priced in over just a quarter or two, but a structural theme characterized by capacity remaining constrained over the long term and capital continuing to chase it.
Take Terafab, for example:
Figure: AI The infrastructure wave will last a very long time
For industry players on the front lines, nobody understands the state of the industry better than they do. Musk’s core view is that the additional AI computing capacity from existing fabs on Earth accounts for only a small fraction of demand, and even if the traditional supply chain expands capacity to the limit, it still won’t be enough. New infrastructure on a “terafab” scale must therefore be built.
Furthermore, as ground-based electricity becomes increasingly expensive and harder to scale, space data centers—a theme that currently seems like science fiction—are also bound to be considered over the long term.
Figure: Space Compute
Three. The makeup cycle: a new upswing may be about to begin
A clear shift is emerging in new consumer trends in makeup, and a new upswing may be about to begin.Aesthetic preferences are shifting away from the clean girl look of the past few years—subtle, low-profile, skincare-oriented makeup—toward a style that places greater emphasis on self-expression, definition, and a more prominent makeup look. Historically, this kind of aesthetic shift has been a key precursor to rising makeup penetration, a broader range of categories, and more frequent innovation.
Figure: Makeup Product Search Interest Spikes in March
The leading signal for the makeup cycle is eye makeup. In fact, eye makeup has undergone a fairly pronounced regimen pullback over the past few years. A renewed upswing in eye makeup typically indicates that consumers are not just replenishing one or two products, but are returning to a more complete makeup routine. According to Circana data, U.S. prestige eye makeup turned positive for the first time in the 25 year’s 3 quarter, and subsequent data from Euromonitor further confirmed this improvement trend.
Beyond the data, there is confirmation from brands, retailers, and contract manufacturers. Manufacturers are increasingly emphasizing reset, expanded assortments, and incremental innovation. As consumer interest picks up, channels and brands are also beginning to commit shelf space, SKU, and new-product resources to this trend.
Figure: ELF (daily chart, as of 260413)
Figure: ULTA (daily chart, as of 260413)
Figure: ITRK (daily chart, as of 260413)
Four. Uranium and nuclear power: unchanged fundamentals and divergence at the micro level
Spot uranium prices have begun to stabilize. In 3, spot prices for U3O8 fell from the high-$86/lb range at the start of the month, at one point dropping below ~$84/lb, but stabilized again at around ~$84/lb by month-end. The term price, meanwhile, remained broadly steady at around ~$90/lb, extending the higher plateau reached after rising in 2. Overall, near-term trading sentiment has cooled somewhat, but long-term pricing has not softened. The main reason is that the persistent long-term fundamentals have not changed:
Figure: Spot and term U3O8 prices as of 3/31/2026
So far, spot trading volume year to date in 2026 remains significantly above the same period last year, but term volume is well below the average for the past 5 years and also below the replacement rate. Buyers are more cautious and inclined to wait and see in a high-price environment. But As long as utilities have not actually completed long-term restocking, this delayed contracting will only push the subsequent shortfall further into the future.
Figure: URA (daily chart, as of 260413); turned bullish again after exiting at the start of 2
Nuclear stocks overall have performed poorly over the past three months, but the divergence in style within the group is clear. CCJ has been relatively resilient, while UEC has fallen but still outperformed SMR, as it benefits more directly from uranium prices. Technology-platform companies, represented by SMR, have slumped sharply, weighed both by risk-off sentiment and by cash burn, uncertainty around customer contracts, and a lack of substantive near-term catalysts.
Figure: CCJ (daily chart, as of 260413)
Positioning data reflect the same outcome: SMR has seen the largest increase in short interest among nuclear power stocks under coverage, while short interest in CCJ and UEC has continued to decline. In other words, The market is now more willing to express the nuclear power theme through the resource and fuel chains, and less willing in the current environment to show much patience with companies like SMR, which have high valuations and long timelines to deliver.
Figure: SMR overlaid with CCJ (daily chart, as of 260413)
V. A few charts
1/ The latest Mic consumer survey, if the preliminary reading for 4 month is not revised substantially in the final reading, would be the lowest level in the indicator’s history. Consumers’ subjective perceptions have clearly moved close to an extreme-stress zone. This contrasts sharply with current market price action: consumer sentiment has plunged, but the stock market has not reflected a deep risk-off move. One key reason is that earnings season is underway, and from the perspective of analysts’ earnings revisions, there has been no synchronized, systematic EPS downgrade in the US and Europe. In other words, although people’s experiences are worsening at the micro level, this has not translated into recessionary pricing in earnings expectations. The market is trading the future, not the present.
Chart: A decidedly poor consumer survey result
2/ Contrary to expectations, since the start of the Iran war, STOXX 600’s 26-year consensus profit margin estimates have actually been revised upward At least so far, the first-round impact of the war on European earnings expectations has not taken the form of a synchronized collapse across the market. The upward revisions are mainly supported by financials and energy, which means that resilience at the index level is being sustained more by a handful of sectors than by broad-based earnings improvement. Looking further, most earnings downgrades in Europe ex Financials and Commodities are actually due to margin compression, rather than an obvious cliff-like drop in revenue.In other words, the problem facing European companies at present is the erosion of profits due to costs and the pass-through of pricing, rather than a clear weakening on the demand side. This distinction matters, because margin downgrades usually imply continued, pronounced divergence within the market.
Chart: Upward revisions and divergence
Beyond Financials and Commodities, Europe has another exception: Hardware & IT Equipment. In the current environment, hardware and IT equipment are not only AI beneficiary areas in the US market, but also one of the few growth pockets in Europe still receiving support from earnings revisions.
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End of article.
Used alongside this are the US equities, A-shares/H-shares, and commodities planets, which cover some additional market details. Their content is continually being developed:
US equities:https://www.meridianresearch.app/home?product=us-strategies(Xingzhi)
A-shares/H-shares:https://www.meridianresearch.app/home?product=asia-strategies(Ganglong)
Commodities:https://www.meridianresearch.app/home?product=commodity-strategies(Dixin)
Note: Everything in this article is for reference only and does not constitute investment advice, nor should it be taken as a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on this information as a basis for making decisions.