Good morning, investors. CoreWeave is the latest AI stock to surge double-digits after reporting blowout earnings.

Demand for its products, management said, remains astronomical.

That’s the same thing other firms like Micron and TSMC have echoed on recent earnings calls.

As far as the stock market goes, the AI boom does seem to be making things cheaper.

The S&P 500 has hit 26 record highs in 2026 while getting cheaper the whole way up.

The rally has been built on profits rather than rising valuations, which investors typically consider a best-case-scenario in the stock market.

Earnings have contributed 20.3% of the index’s 14% total return so far, according to data compiled by Exhibit A, while the price-to-earnings multiple has shrunk by 7 points.

That’s the opposite of what happened in 2023 when multiple expansion drove nearly three-quarters of the S&P 500’s total return.

Returns have not only accrued to the mega-cap technology stocks but instead have lifted every corner of the market.

The equal-weight S&P 500, for instance, is outperforming the market-cap weighted index, which means the average stock in the market is faring well.

The snag — which more perceptive bears have highlighted — is that even as the bull market broadens, profits remain concentrated.

FactSet estimates put second-quarter profit growth above 50%, the highest rate since 2021. But that cuts to 32% once you strip out Alphabet and Amazon.

Those two companies have supplied more than a third of the market’s growth.

And yet neither of their stock prices have seen outsized returns. Alphabet still lags the index and Amazon is only ahead modestly.

The stock market has indeed gotten cheaper since the start of the year, but the multiple compression does indeed have a lot to do with two outlier mega-caps.

The Defiance Drone & Modern Warfare ETF (NYSE: JEDI) is now the first US-listed ETF to offer exposure to Shield AI, the defense company behind the Hivemind AI pilot and the X-BAT aircraft.

One ticker, public market access to a private defense leader. JEDI holds the position through a single-asset SPV, carried at fair value and disclosed in daily holdings.

Shield AI is live in JEDI today. ✈️

Learn More*

📊 Inflation releases this morning at 8:30 AM in New York. July CPI is forecast to rise 0.1% month-over-month with headline inflation falling to 3.4% year-over-year, a mild cooling that could ease pressure on the Fed. (Morningstar)

🚀 CoreWeave doubled quarterly revenue and the stock jumped 13% after hours. The AI cloud provider posted $2.58 billion in sales, disclosed a $104 billion revenue backlog, and layered a fresh $21 billion Meta contract on top of its existing $14 billion commitment through 2032. (CNBC)

📉 Alphabet stock fell 3% on ballooning AI capex. Google's parent lifted its 2026 capital spending forecast to as much as $205 billion and just closed a $25 billion debt offering to keep the data-center buildout funded. (Yahoo Finance)

Josh Schafer is an investment writer at Barron’s and the author of the Searching for Signals newsletter. We discussed the negative cash flow of hyperscalers, how to pick winning software stocks, and three under-the-radar stocks that his team likes right now.

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🗓 August 12, 1981: IBM unveiled its first Personal Computer at the Waldorf Astoria in Manhattan for $1,565. The launch generated $1 billion in first-year revenue.

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*Distributor: Foreside Fund Services. An investment in JEDI is not a direct investment in Shield AI.