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https://acr-invest.com/commentary/the-ai-earnings-lump/
3Q 2026 Commentary
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ACR Alpine
Capital Research

A fundamental valuation-based asset management firm, managing portfolios for financial intermediaries and institutions.

100% employee-owned, our investment philosophy emphasizes broad mandates, deep fundamental research, and focused portfolios.

About

100%

Employee-Owned

All

Cap Strategies

12

Investment Team Members

16

Years+ Average PM Tenure

37

Employees

$12 B

In Assets

Low

Turnover

1999

Founded

5

Strategies

Investment Principles

Valuation Excellence = Investment Success

Newton’s Cradle, its steady rhythm governed by the laws of physics, reminds us of the enduring economics of a successful business. The compounding of cash income over time may not be as exciting as daily price action on blinking red and green screens, but it is the only source of true asset value.

 

  • Fundamental value and risk are our focus when evaluating investments.
  • We insist on quality with a margin of safety.
  • We only invest in what we understand.
  • Diversification and concentration are balanced with knowledge.
  • Communication is essential for intelligent investor decision-making.
Investment Principles

ACR
Commentary

3Q 2026

The AI Earnings Lump

Equity markets settled back into modest gains in the 3rd quarter after their 2nd quarter Gen AI1 risk-on surge. Rising rates, sovereign debt concerns, and emerging Gen AI skepticism made ...

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“Equity markets settled back into modest gains in the 3rd quarter after their 2nd quarter Gen AI risk-on surge. Rising rates, sovereign debt concerns, and emerging Gen AI skepticism made for a more cautious narrative. ”
“Gen AI may be producing the greatest technology hype cycle ever. The storyline is irresistible. Humankind has finally cracked the code on super-intelligence (defined here as a single source more intelligent than the smartest expert in every field).”
“We believe Gen AI is a disruptive technology that will be built into enterprise workflows and consumer products for many years to come. Our hope is for a tailwind to productivity, though it is too soon to say how measurable the gains will be. As revolutionary as the Internet was, pinpointing the timing and level of its productivity gains is still difficult. In addition to cybersecurity risk, the economic risks of the Gen AI buildout are our greatest concern.”
“If corporate earnings are forecasted to grow without AI, why worry about temporary excess profit growth? There are two reasons. The first is to be mindful of the reversal of these trends and the dynamics this could entail. The second is to understand that even though reported P/E ratios are historically high, they are even higher than shown due to the current temporary distortion in earnings.”
“Our goal is to protect ACR clients from such an outcome by maintaining portfolios with vastly different valuation characteristics from the market. The Gen AI boom may extend the secular bull market longer and further than we think, but whether we are in the 5th or 9th inning of this great hype cycle, we will continue managing risk for a day of reckoning while seeking a satisfactory return.”