Today is Friday, October 23rd 2026 and it was a big week for value.

Tech and momentum investors attempted to buy this dip this week, but ultimately they are giving up more of their year-to-date returns. I am hearing all kinds of commentary of the value in AI and semiconductor stocks, which typically quotes a low forward price to earnings ratio. I think this commentary is seriously missing the mark because a P/E ratio is merely a shortcut for discounting all the future cashflows of a company. If the cash flows in year 5 will be 80% lower than year 1, a P/E ratio is hiding most of the story.

That brings us to What Worked in Value:

I think value stocks are working because they have far more predictable earnings streams than most AI infrastructure companies. Defense contractors, with most of their revenue and profits coming from the biggest, most deep-pocketed customer in the world, the US government, had a phenomenal week.

Next up is On the Hunting Trail for Value

With so many people on my feeds complaining about losses and touting the value of their beaten up AI infrastructure stocks, I did a lot of digging this week. I'm afraid to say the average investor in AI infrastructure has no idea what kind of value is outside of their world.

Wrapping Up:

Investors attempted to buy the dip in the AI momentum trade this week but have so far been unsuccessful as serious concerns arose over spending continuing the next few years. AI investors need to consider the whims of hyperscaler companies and the limiting factors like restricted access to capital. Defense, on the other hand, wins championships, and value seems to be on its way for a multi year dynasty. Thanks for listening and have a great weekend.

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Brian X Account: https://x.com/bfrankvalue

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