US Senate Advances Plan to End Government Shutdown; AI Doubts on TSMC Sales

implicit

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AI valuations up

BNP Paribas 8.5
Investment Bank $600.00B
Sophie 8.0

US Senate Advances Plan to End Government Shutdown; AI Doubts on TSMC Sales | The Pulse 11/10

ndx

The fact that we still have a K-shaped recovery is actually a positive sign for AI valuations, meaning we haven't seen AI yet feeding throughout the different sectors and throughout the economy. So I'm more hopeful on that than I would say the street. Earnings remain good, AI investments are growing, profit margins supportive, and tech valuations, while stretched, are justified by growth potential, indicating an expected medium-term upward trend in NDX.

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10/31/2025 1:03:58 PM	short term up	7 days later	-1.39%	-1.39%
10/20/2025 4:18:21 PM	medium term up	20 days later	+1.93%	+1.93%

So first of all, I mean, there seems to be a little bit of hope on the markets, that the government shutdown comes to an end and then we can go back to focusing on AI valuations. What do you think will support the market going forward?

Francine Lacqua
Sophie

I think there is a risk that we could have materializing. We've been through monetary easing for a year and a half now. Fiscal support is still ongoing. We have not seen any fiscal tightening anywhere. We're seeing green shoots of recovery in Europe. What if it will be broader and we have upside surprise in the next quarter?
When you look at the K-shaped recovery in the U.S., what does it mean for AI and AI valuations?

Francine Lacqua
Sophie

The K-shaped recovery means some people have been left behind due to AI technology innovation. The fact that we still have a K-shaped recovery is a positive sign for AI valuations, meaning we haven't seen AI yet feeding throughout different sectors and the economy. I'm more hopeful about that.
You focus a lot on earnings and companies. What are you seeing overall?

Francine Lacqua
Michael

Especially in the U.S., earnings have been very good, also in Europe. The bar was low before the season, so not much of a surprise. Valuations are stretched, especially in the tech sector. Growth is there. There are signs of stress on earnings side. AI hyperscalers have huge commitments — 80% of cash flow next year — which is already looking a little stretched.
Sophie

S&P 500 profit margins have been flat for two years but AI investment has changed everything. Adjusted for profitability, S&P would trade at 17 times vs. 22 times for the tech bubble. For now, everything looks good but some stocks show frothy valuations. There is bigger risk being left behind than overspending on AI innovation.
How will the end of the government shutdown affect data and Fed expectations?

Francine Lacqua
Sophie

U.S consumer credit, confidence remain low. Data might not change dramatically. We are experiencing ongoing non-recessionary cuts feeding into the system. Unless consumer demand feeds into bank credit risk, things look good for now.

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