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Macro Influence on AI Themes into Earnings

Published on July 10, 2026

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By

Dennis DeBusschere

Kevin Brocks

Sophia Wang

WEEKLY AI Update: We have talked about the sensitivity of AI themes to rates through the risk that a VAR shock from tightening financial conditions poses to Price Momentum (HERE). Absent that risk, idio dominates returns. FYI, that risk would be realized IF core PCE tracks >21bps MoM through year-end (HERE).

The internals of the AI theme are becoming increasingly rate sensitive too, largely tracking Momentum exposure. Higher yields bias AI themes towards mean reversion. The rolling beta of Morgan Stanley’s Generative AI Baskets to 10yr yields is below. They are all significantly above their long-term medians. IF higher yields are associated with higher inflation, there is a larger headwind to AI baskets than usual. Our own cutup of AI Users into Goods and Services companies shows the same thing; AI Services are positively correlated to yields and Goods are negatively correlated to yields.

That is an interesting setup into earnings. Inflation next week will help dictate how the themes trade during earnings. IF inflation next week is benign (implying <30bps CPCE), it increases the alpha opportunity in stock picking and/or AI theme selection. IF inflation is hot (implying >30bps MoM CPCE), it increases the odds that macro will continue to influence returns during earnings season.

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