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Follow the $50 Billion Buy-In
Wall Street just bet billions on a small collection of stocks.
And after a volatile first half of 2026, it looks like they’re about to shift even more.
MarketBeat’s updated 10 Best Stocks to Own in 2026 report reveals the 10 names attracting fresh capital right now.
TOKEN ECONOMICS
AI’s worst nightmare is becoming more of a reality, according to a recent study of token economics.
Roughly 44% of all token spend goes toward fixing bugs that the initial AI outputs made.
This not only requires additional time spent into fixing these errors, but also more token spend that racks up the monthly bills these companies are having to answer to.
The bigger question becomes how this imbalance affects the ongoing spend commitments made by the largest technology firms in the United States.
If the productivity promise isn’t delivered, and the underlying economics of using AI aren’t as powerful as originally pitched,
Then there could be an issue with current expectations, and by extent, valuations.
CHART OF THE DAY
After trillions of dollars are poured into the AI capex wave, what’s really going to be left for these companies?
According to the Financial Times, not much.
As DRAM and NVIDIA chip prices begin to collapse on oversupply issues, the real risks behind the AI trade are beginning to surface.
ARE YOU COVERED? —>
AI ROI Assumptions
Inside our premium publication, we break down the real state of the AI trade, its risks, and which companies are failing to report the truth behind this mania. Become an Insider Here.
NEW FED, NEW PROBLEMS
Kevin Warsh, Recently Elected Fed Chair
The Iran War may have been the most convenient event to happen to the AI trade.
As the Strait of Hormuz supply chain disruptions hit oil prices, inflation readings like CPI, PCE, and PPI have spiked beyond previous trends and expectations.
Yet,
These measures were already on their way up before the Iran War broke out, leaving one other potential candidate theme to pin the blame on.
As the AI buildout and infrastructure development continues to deplete the available supply of basic materials and commodities, bottlenecks have pushed prices higher as reflected in the PPI data.
It seemed inflation was headed toward the Fed’s 2% target, and all was well with the path of interest rates.
Then,
The first quarter of 2026 outlined the level of capex the biggest tech companies in the United States were looking to take on.
That created the supply chain bottlenecks markets are now wrestling with, and the reason behind a PPI spike before the war broke out.
G7 Bond Yields, Apollo Research
As all markets are interconnected, this theme grabbed hold of the bond vigilantes, who immediately took action and adjusted their expectations.
If AI demand is truly set to continue higher, then inflation is expected to follow through its recent path as well.
As a result, bond yields have started to price in a world where most developed economies see higher inflation rates amid this ongoing demand cycle.
On the opposing side of this view sits Kevin Warsh, the newly-elected Fed Chair.
He stands by his take, pointing that AI is actually going to pose a disinflationary effect on the economy once the effects of productivity trickle into operations.
So, in a way, the Iran situation (and its inflation effects) has diverted the attention from AI inflation into Hormuz inflation.
However,
Two of the biggest use cases for this belief just took a hard turn on AI and its true benefits.
Microsoft, and Uber, cancelled their Claude Code spending budgets after a souring realization:
Token usage costs more than keeping engineers on the payroll.
In other words, AI turned out to be more expensive than the employees they tried to replace, failing to deliver on the productivity promise.
Which poses a new challenge for AI models and their ramp up to revenue targets, an especially important factor now that OpenAI and Anthropic target $1 trillion IPO valuations.
It also alters the entire economics of the AI race and incentives to keep investing into it.
As the Financial Times pointed out, most of these companies will see a negative return on investment from their AI ventures.
This is the result of token economics, which reflect the way AI changes the economy faster than the economy can absorb.
However, that doesn’t mean all AI investments are doomed…
WHAT’S THE TRADE?
If you’ve been covering the story behind the AI race, then you are well aware of the opposing trade.
The SaaSpocalypse that began in late 2025 is now in full swing, and consensus has swung so far in that direction that we couldn’t ignore it any longer.
Going into our expectations lesson from The Offside Playbook, the intuitive call is to consider whether AI is truly going to take over the SaaS space in the coming years.
According to the current economics, and the cancellations from Microsoft and Uber, it would seem software will live to fight another day.
We are actively looking into this situation and finding interesting data behind a bullish case to be made for some software names.
At the same time, we don’t think the AI race is done and over. There are some issues to be fixed in that trade, issues which can become profitable opportunities so long as the AI inflation view doesn’t get in the way.
If G7 bond yields continue to push higher along with AI inflation, then financing new capex will come against a new set of headwinds, headwinds which can initiate a new rotation of its own.
Stay in the loop, sign up to Offside Premium.
A Final Note
COMING UP NEXT
The K-shaped economy gains traction as a topic among investors, we believe this is an overly ignored section of the market ripe with opportunities.
China’s best LLMs have proven to be ten times as effective compared to US peers, a place worth looking into.
All-time highs for the S&P 500 on weakening breadth raise concerns for Goldman Sachs strategists, get caught up below before the week starts.
Until next time,
OFFSIDE RESEARCH
Against the Tape, Ahead of the Curve.