There has been a significant increase in the share of U.S. businesses that have paid subscriptions to an artificial intelligence (AI) platform (above), while mentions of AI disruptions are skyrocketing. It’s a conundrum.

The Session

The S&P 500 (SPX) spent most of the session yesterday spinning its wheels before eking out a small gain. Real Estate (XLRE), Financials (XLF), and Technology (XLK) led the way.

I know I’ve said that “earnings are the mother’s milk” of stock market rallies, but when it comes to individual names, few things make me more excited than expanding profit margins. Right now, tech and Industrials (XLI) are seeing expanding margins.

Mr. Softie Can’t Get Up

The market was ready to take off if there was only a spark from software stocks (IGV). For a moment, it seemed possible after ServiceNow (NOW) halted company stock sales and its CEO, Bill McDermott, pledged to buy $3,000,000 in company stock. Then, folks started crunching numbers, and that $3.0 million looked like an insult against McDermott’s $36 million salary and $100 million net worth. Nice try, I guess. The stock gave up gains and slipped into the red again.

There is a lot of talk about value dominating growth, but I don’t see what’s happening in the market as a classic rotation into less expensive, less volatile names to avoid wild gyrations. This is just another form of chasing performance. However, “Hot” money is buying whatever is moving higher in the ultimate game of musical chairs.

Consider classic “value” sectors, absolutely valuations here. It’s insane. Consumer Staples (XLP) has never been this expensive.

Mega-cap tech is oversold, but that doesn’t mean it will stop going down today – it does mean, however, there are a couple more big hurrahs out there.