AI Is Exploding… So Why Are Stocks Starting to Look Weak?

m0xt (0:00)

I think there's absolutely no way we can have a drawn out bear market at this pace of growth. Because it's not just growth of CapEx, it is growth of revenues. I mean, you just saw OpenAI go from 40 billion to 70 billion in like a month and a half. They added 30 billion in ARR in a month and a half. These numbers are actually insane.

LGDU Set (0:21)

What's up, everybody? It's LGDU Set here, and welcome to Milk Road Stocks, the daily market show. I can't believe it's almost October, that we're still talking about software on the show. But I promise they only talk about it for a little bit today. Today is September 30th, 2026, recording on the 29th. AI agents are finally here, and they might be about to blow up the software market. OpenAI, Meta, XAI, they're all moving aggressively into agents and enterprise. Now we're back to the same question from earlier this year, who gets disrupted next? Meanwhile, the AI trade still looks shaky. Although OpenAI just reported huge annual numbers, the macro looks terrible. So which way does all of this go next? On today's episode, our four top analysts debate whether SaaS stocks are heading for that massive sell-off, whether the AI labs can actually make money on all this growth long-term, and why Micron's earnings could tell us whether the infrastructure boom is just getting started. And a reminder that you can see each of their portfolios in Milk Road PRO for just a dollar and also catch an exclusive 20-minute session recorded after the episode where the guys discuss their actual moves with each other in Milk Road PRO. After hours, all of that is at the link below.

m0xt (1:25)

Gentlemen, welcome back to another roll-up, as usual, jam-packed with things going on that we're going to talk about OpenAI, hitting 70 billion in AR. I think it was a surprise for a lot of people.

Not so much a surprise for me. I think you've been watching the show. I've been saying very bullish OpenAI and their revenues, but Martin and Vincent, they've been bearish and I think now they've been told off. So we'll talk about that in a bunch of other things, but let's just start on macro because I think there's a lot of things going on in the market at the moment. Melvin, why don't you, oh, by the way, Vincent will be joining us in a few minutes, so don't worry for those listening. He's just running a little bit late, but he'll be popping in later. But Melvin, why don't you kick us off? What do you think in the markets right now?

Melvin (2:09)

Sure. Yeah, we actually had a lot of bullish news yesterday. NVIDIA announcing their $150 billion buyback, Meta pushed Muse deeper into Enterprise, and then we had SpaceX, had another major Starship milestone. But despite all that, market still finished red yesterday. I think the biggest reason was rates. The 10-year briefly hit around 5.25. It could be higher now, which is the highest level in 19 years. Oil remained above 92, despite there was some major headlines going around, despite that, oil still remained elevated. We all know higher oil creates more inflation concerns, and higher inflation makes investors like us worry that Fed may increase rates during the next meeting.

To be honest, the economic data hasn't really helped either. The reason being is that Flash PMI for September surge to a five-year high, showing that there's strong economic growth and momentum. Then Dallas Manufacturing, which came out yesterday survey, showed the same thing, higher growth.

They also said it's a higher inflation environment. What was surprising was the consumer spending has remained surprisingly resilient, and also the labor market has shown signs of improvement as well. Now, normally, stronger growth is good, but in this market, weird news is bad because that means the Fed might rate hikes, or keep the rates higher for longer, which is not what we want in this environment because of all the build-out that has to take place on that. So yesterday, because of all that, we had a bit of a sell-off, and also keep in mind that yesterday we had Fed officials, some of the Fed officials came out and saying that AI infrastructure build-out could create near-term inflation as well, which I don't agree.

m0xt (4:10)

Sort of like memory, memory, power. There are things that you're starting to see that with, like our laptops are now gone up 20 percent.

Melvin (4:18)

Exactly. But today, we're seeing the opposite of that. OpenAI, like Kyle mentioned, just hit 70 billion in ARR reportedly. That's just showing us how much the demand is growing. They were at 20 billion in 2025, end of 2025 They were just at 45 billion a month ago. Now, they're at 70 billion, which is crazy. What they said was interesting was, enterprise is now its fastest growing B2B revenue, and it's up more than 700 percent since July.