Hey Income Traders,
Here’s how I’m thinking about the market right now.
The last two or three years rewarded one very specific playbook. Buy the obvious winners. Buy the hype. Buy the easy narrative. That worked until it didn’t.
Now we’re in a different phase.
AI is not slowing down. If anything, it’s accelerating so fast that even the people building it are saying, “This is insane.” I’ve said it before and I’ll say it again. This feels like a Netscape moment. The speed, the capability, the creativity unlocked by these tools is extraordinary.
And that’s exactly why the market is nervous.
If AI lets you do in weeks what used to take years, entire business models become questionable. Software, media, design, workflows, all of it is more disruptable than ever. The SaaS index fell 6.5 percent last year while the S&P 500 rose 17.6 percent. Median valuations for software companies dropped from 18x revenue at the pandemic peak to 5x today. The market is repricing the entire sector.
But here’s what is clear.
No matter what happens in software, they’re going to build more data centers. They’re going to upgrade power lines. They’re going to need more machines, more materials, more infrastructure. The hyperscalers are spending over 600 billion dollars on infrastructure in 2026 alone. That’s bigger than the Interstate Highway system, the Apollo program, and nationwide broadband combined. Someone has to build all of that.
People are still going to drink Pepsi and eat McDonald’s. The physical economy doesn’t disappear.
That’s where investors are finding comfort. Utilities delivered 23.4 percent returns in 2024 and are up over 20 percent again in 2025. NRG Energy (NRG), a power company, outperformed Nvidia (NVDA). The market is telling you where the certainty is.
For me, that means being selective. There are tech names I’d still own for multiple years. There are others I wouldn’t touch for a long-term hold right now. That doesn’t make them bad companies. It just means the range of outcomes is too wide.
On the other hand, companies tied to building, fixing, and maintaining the real world feel far more knowable in this environment.
Between the users of AI and the builders of the new world, that’s where I think the benefits accrue for a while.
The market is telling us something. I’m listening.
And i’m sharing three companies set to do well as the world changes.
Hans