Bloomberg Surveillance · Monday, July 13, 2026
Federated's Stephen Auf outlines three stages of the AI theme: the initial spenders, the chip companies benefiting, and now the broader economy seeing benefits with higher margins. He believes this third stage could drive a broadening out of the market, with small caps currently outperforming.
“So the first stage was the spenders, the second stage was the beneficiaries with the chip companies, and now we're moving in or not this the benefit of the spending, but now it's the guys who are actually benefiting from AI, which is the broader economy. So we've been thinking we're moving into that third stage. Margins across the board are going higher. AI is part of that, and you know that could drive the broadening out trades so to speak.”
“That has actually been working beneath the sheets here. I mean, you know, small caps are widely outperforming everything else, so we're overweight there.”
“We think the large cap growth stocks have become value stocks now, so we actually like those stocks here. The only thing we don't really like are bonds and European equities.”