LIVEDaily Stock Market Report (Fri 23 Oct 2026) - Agenda
Good morning and welcome to the new format of Stockopedia's DSMR!
You will notice a few changes around here today. I hope you like them. There's a full explanation at this link.
In markets, the Nasdaq fell 2.9% yesterday, as investors try to muster up a little more scepticism against the AI trade:
What's interesting to me is that the median valuation ratios for this index are expensive, but not at a level that I'd describe as extreme:
Yes, the trailing PE Ratio of 30x is at a level which suggests mediocre future returns.
On the other hand, the forecast PE Ratio of 23.6x, combined with forecast EPS growth of 16.5%, suggests that patient investors might do fine. The PEG is over 1x, but a couple of years of 16.5% growth would bring the valuation down considerably.
To be clear: I do consider sentiment around AI to be consistent with a bubble.
And there are two big reasons to be cautious about the optimistic words I've just written.
Firstly, they are based on forecast earnings.
Secondly, they are based on median valuation ratios. Most investors with Nasdaq exposure have very heavy exposure to the top names - Nvidia, Apple, Alphabet, and so on - rather than to the median stock.
In the end, a handful of very large corporations are going to determine how most investors fare. Given the level of concentration in US indexes, I personally prefer for my portfolio to be underweight them.
Overnight market movements:
The FTSE is up 0.2% at 10,745
S&P 500 is down 0.1% at 7,655
Brent crude (December) is up 1.1% at $114.45/bbl
Gold is down 0.2% at $4,015oz
Bitcoin is up 0.7% at $81,750
The table is complete.
Companies Reporting
Name (Mkt Cap) | RNS | Summary | Our View (author) |
|---|---|---|---|
Rio Tinto (LON:RIO) (£102bn | SR78) | Rio Tinto will invest $1.9 billion1 to develop the Kangwinan bauxite project on Western Cape York Peninsula in Queensland. It will add 20 million tonnes of annual bauxite production capacity with first output targeted in 2029 and full production expected by 2032. | ||
Unite (LON:UTG) (£2.3bn | SR37) | Has exchanged contracts for the sale of the academy school at Hawthorne House for £40.7 million. UTG remains "ron track to deliver £300-400 million of disposals this year.” | ||
Boohoo (LON:DEBS) (£405m | SR54) | Adjusted EBITDA +14.6% to £24m. Profit before tax £28.3m including non-cash lease credits. Post-period-end transactions will reduce net debt to negligible levels by year-end. Full-year outlook: the Board expects to deliver GMV growth and Adjusted EBITDA of no less than £59m, as previously guided. | s | |
GB (LON:GBG) (£357m | SR48) | For personal reasons, the Chair intends to retire with effect from 30 Nov 2026. | ||
Avacta (LON:AVCT) (£314m | SR3) | Presenting the FOCUS-01 Phase 1 clinical trial design and substantial progress in the preclinical arena at the European Society for Medical Oncology Congress. | ||
Halo Minerals (LON:HALO) (£253m | SR7) | Key mining permit granted for the Playa Verde Project under Article 17 No. 1 of the Chilean Mining Code. Authorises mining works relating to the dredging of mineral-bearing material at Chañaral beach, including within the urban area. | ||
Helical (LON:HLCL) (£213m | SR29) | At Brettenham House, agreed lease with FGS Global for floors six, eight and nine. In the development pipeline, on track to deliver both Delta Paddington and 10 King William Street on schedule. | ||
Evoke (LON:EVOK) (£190m | SR52) | Takeover completion “is expected to be late in the fourth quarter of 2026 or early in the first quarter of 2027”. | TAKEOVER | |
Fintel (LON:FNTL) (£180m | SR36) | Acquisition of Mortgage Brain Holdings & Directorate Changes | Buys the remaining equity of Mortgage Brain for £38.4m net of cash acquired. Previously bought 5.8% stake. £9.5m is deferred for 18 months. Mortgage Brain expected to deliver £12m of revenues in 2027 with EBITDA £3.8m. Chair becomes Exec Chair to create additional capacity for Fintel's CEO. | Buys |
Ondine Biomedical (LON:OBI) (£58m | SR8) | The University of Ottawa Heart Institute reported that Steriwave® nasal photodisinfection outperformed mupirocin with a 51.5% reduction in CABG conduit harvest-site infections and 93.3% patient compliance. | ||
Christie (LON:CTG) (£40m | SR86) | Chrstie advised JP Immobilien, the Austrian property developer, on the sale of Bikini Island & Mountain Port de Sóller Hotel located in Mallorca to Amundi | GN note: no reference to any impact on expectations. | |
Bezant Resources (LON:BZT) (£28m | SR10) | Enters into an agreement with a US-based lender managed by Yorkville Advisors for a £4 million gross financing facility. Repayable in cash in ten equal monthly instalments, starting 15th January 2027. Interest rate 5% plus 6% upfront fee plus warrants at 0.16p. | ||
Robinson (LON:RBN) (£21m | SR77) | The Board now expects underlying operating profit for the year ending 31 December 2026 to be in the range of £1.2m to £1.6m. Revenue for 2026 is expected to be approximately £59m, 6% ahead of 2025. Excluding the benefit of potential mitigating actions, the Board expects FY2027 profitability to be in line with FY2026. | PROFIT WARNING |
At the time of publication, GN has a long position in EVOK.
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17 comments
The AI trade might take the eye off diesel. For the time being makes the world go around and builds wind farms. Trumps failure to get Russian gas could mean a global recession next year unless strategic reserves are robust of which there are two camps. Price beats the news.
I don't have any AI positions directly and no real axe to grind.... but for me of more interest than whether stocks look optically expensive or not .... is how sustainable current investment is? Capex has obviously risen off very depressed levels and at first funded by cash flow but debt is creeping into the mix along with equity from high profile IPOs. The tap seems to be open and the large investors would appear to be insensitive to returns - they can't afford to be left behind.
At some, hard to define point, the tap closes though - investors get frustrated with lack of return and earnings come under pressure. Should this cycle reverse it will have quite meaningful GDP implications - and not to be fixed by fiscal policy - which is already stretched. Which is my main concern - you have a slow down unlikely to respond to fiscal nor monetary policy and this could knock 3-10% off US GDP - which all equities would likely take badly. The wealth effect of falling stocks will also be unhelpful. Of course all these things could have been said 12 months ago and being negative and out of equities has yielded no return .... which results in the present conundrum.
I think there is enough evidence that bond markets are somewhat stretched and under pressure that having some defence in mind is warranted ....and so as a minimum would scale back on global GDP plays. Missing some return but being able to step into a correction is a sustainable strategy even if it does miss out on some short term return.
I saw an interesting analysis earlier that was saying most analysts seem to think change in AI capex was going to flatline from 2028, but in the last few days both Musk and Zuckerberg have suggested that it will ramp many times higher. Could explain part of the recent sell off?
Could explain part of the recent sell off?
how material is the selloff in relation to how far the very same stocks have risen in the last 24 months ? there is your answer stoocks gop down as well as up - any stock that has risen alot will be liable to some pullback sooner or later.
Is the pullback in anyway material compared to previous rises - i doubt it very much.
If we take Nvidia yes its down 6% in 30 days - drill out to 5 years and its up 833%
Cuurrent Nvidia pe is 26 - that doesnt strike me as being uber expensive i must admit - clearly though they have been an an uber sweet spot ref their ability to make great profits right now with supply clealry being lower than demand.
What is 100% crystal clear to me is that AI is gonna be woven into everything we do - so clealry the medium to long term demand is gonna be sounds as a pound ? can current pace of spending carry on without some dip i know not?
the tricky bit is working out who the winners and losers will be - i dont really know but i kinda guess the big ones already making good profits and who can afford to invest from profits - and leverage AI to get future income "at margin" are gonna do ok.
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Regarding Nasdaq, I wonder if you have heard of photonic chips? If they do what they claim, they will upend the whole AI cost model, and Nvidia with it. The cost per token or cost per token watt will collapse.
Believe talking about transfer by laser rather than copper cables between data centre racks. Believe that relies on indium phosphide which AXT (NSQ:AXTI) and Sumitomo supply but rare. Supply bottlenecks are a thing to watch, thought that was copper but metals being beaten up currently. Worth a study.
System1 (LON:SYS1) Brave Bison (LON:BBSN) Is it normal for a company to put out so many updates about the % of shareholders willing to accept a bid?
If it's brave bison doing it then it looks a bit like a desperate teenager trying to organise a house party and no one wants to come.
The chunky physical post is a bit OTT as well. Straight in recycling …..
As a semi-permanent and wrong bear on the American market (debt bubble), I recollect with pain what storms and falling markets brought in 1987. Good luck guys, it may not happen.
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When earnings are a function of capex, the historical number is more instructive. I can't remember how many times I've read here that top of the cycle multiples are low and bottom of the cycle multiples are high.
Perhaps the median stock does not have earnings inflated by capex, then it is likely an "AI loser" which is pretty much every software company or every other stock in the index. Then yes, these stocks are not part of the bubble, but then they are not reflective of the index either.
Nice points, Matthew.
The Nasdaq I referred to above was the Nasdaq-100. The Nasdaq composite, with 3000+ stocks, is cheaper again: forecast PE 15x, growth 18%. So the PEG is less than 1x here.
This says to me that if an investor is selective and digs around, it should be very possible to find value in this index. But as you correctly point out, the median stock is not reflective of the index as a whole. Perhaps when the air comes out of the bubble, stock-pickers will finally look smart again.
Yes, I agree that there is likely value to be found within the index. One phenomenon I've observed is that investors have shifted their tech allocations from software to hardware (or the underlying tech funds they own have) which will reverse when the bubble pops. The nice thing about this bubble is that it has bifurcated the market, so it is easy to avoid it and profit from it.
If I were a passive index investor I'd be questioning if I want to be holding a heavily loss making merged Tesla/Spacex as one of my 10 largest positions, soon to be joined by similarly uneconomical Anthropic and OpenAI.
Graham - should it say “the PEG is above 1x” given PE is 23.6x and EPS growth of 16.5%?
fixed!