May Equity Review - Calibrating the rotation within

The guy just got $70bn of funny money to play with to get us to space. Of course, bond investors are not the same as equity investors. Equity investors, you can take them to Mars. Bond investors are, like, ‘where is my coupon?’

— Ludovic Subran, Allianz CIO, speaking at the FT Global Insurance Summit on 24 June.

June marked a turning point in the character of the AI trade rather than its direction. For most H1 2026, it advanced as a single instrument; in June, its internal hierarchy fractured. It was a momentum unwind, owing more to market structure than to any deterioration in fundamentals. The rotation was visible in market breadth: the equal-weighted S&P 500 outperformed the benchmark by 3.24 percentage points, even as the headline index slipped 1.06% and the Russell 2000 and the Dow led the major indices.

Beneath the price action, the earnings backdrop strengthened. Q2 is set to deliver the S&P 500's seventh consecutive quarter of double-digit growth, with the blended rate revised up to 23.1% from 18.8% at the quarter's start, led by Energy, Information Technology and Materials, and offset only by a contraction in Health Care. Sell-side conviction is commensurate: Buy ratings stand at their highest month-end share since at least 2010.

The through-line is that the buildout is real, but no longer moves as one. This edition of the Equity Monthly Review frames June's rotation through the seven-layer AI taxonomy and previews a Q2 season that will test which layers are earning their valuations.

This report will analyse:

▪ S&P 500 earnings growth and estimates for Q2

▪ Sectoral revisions for Q2 and net profit margins

▪ Sector-specific monthly performance for US and European equities

Download the report

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