Wall Street Breakfast AI premium fades as staples surge
Feb 26, 2026
Markets shift away from AI winners toward consumer staples as valuations for staples climb. Krispy Kreme and Shake Shack surge after strong earnings and strategic moves. Jane Street becomes a major silver ETF holder, hinting at unusual positioning. The S&P 500 triggers a Hindenburg Omen signal, stirring debate about market breadth and risk.
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AI Premium Has Faded Toward Staples
- The AI mega-cap valuation premium has faded as forward P/E for the Magnificent 7 (ex-Tesla) fell below consumer staples.
- Matt Ciminaro's chart and Neil Setti highlight staples' forward P/E at decade highs while mega-caps slide, shifting investor preference toward staples.
Krispy Kreme Rally On Turnaround Moves
- Krispy Kreme jumped over 20% as investors rewarded its turnaround despite organic revenue down 3.9% in Q4.
- CEO Josh Charlesworth cited strategic closures cutting points of access 13.5% and profitable U.S. expansion.
Walmart And Costco Inflate Staples Valuations
- Walmart and Costco drive much of staples' high forward P/E, together ~20% of XLP and trading at PEs in the 40s and 50s.
- Neil Setti warns the broader staples group still looks stretched and unlikely to become major earnings compounders suddenly.