The three mousqueteers

Expected EPS growth for the S&P 500 over the next 12 months now stands at 18.6%, driven overwhelmingly by three sectors: technology, materials and energy. In tech, the engine remains the massive AI-related CAPEX cycle, with hyperscalers investing aggressively into infrastructure and computing power. In energy and materials, geopolitics, supply constraints and higher commodity prices continue to support earnings expectations.

These are powerful forces, but they also create concentration risk. Markets close to all-time highs are increasingly dependent on a narrow number of themes continuing to deliver. Any slowdown in AI investment momentum, easing energy prices or normalization in commodity markets could quickly change sentiment.

At ECP, while we continue to believe equities remain the unavoidable long-term engine of investment portfolios, we also believe diversification across sectors and individual companies, combined with disciplined valuation analysis, remains essential.