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S&P Hits New Highs as Tech Earnings Crush Recession Fears | The Weekly Wrap

The Real Eisman Playbook · Steve Eisman · May 8, 2026 · Original

Most important take away

The S&P 500 is hitting new highs because tech (now ~35% of the index, ~50% including Amazon/Google/Meta) keeps beating estimates - InfoTech revenue grew 28.7% in Q1 2026, and all 11 S&P sectors beat January revenue estimates. Operating margins sit at an all-time high of 20%, so a recession is not imminent and the market’s “expensive” multiples are justified by the structural shift toward higher-multiple growth stocks. The risk concentration is in software (down 50%+) and the private equity / private credit firms over-exposed to it.

Summary

Actionable insights and stock-specific takeaways:

Macro / portfolio positioning

  • Don’t fear the headline market multiple. Schiller PE >40 and market-cap-to-GDP >200% look extreme, but tech’s growing share of the S&P (20% in 2016 -> 35% today, ~50% with adjacent names) mechanically lifts the multiple. As long as tech keeps printing strong numbers, indices heavy in tech will be fine.
  • Use credit quality + revenue/EPS/margin breadth as your recession dashboard. With all 11 sectors beating Jan revenue estimates and margins at an all-time high of 20%, recession is not imminent. Reverse the call quickly if a recession appears - “all bets are off.”
  • The economy remains K-shaped. Stick with tech, power-related industrials, and financials. Stock-picking outside those sectors is “tricky.”

Stocks to favor (constructive view)

  • Visa and Mastercard - Eisman’s explicit safe haven in payments because their network franchises are “impregnable” while competition crushes everyone else.
  • AMD - Q1 sales +38%, EPS $1.37 beat $1.28, Q2 guide $11.2B vs $10.5B expected; stock +15% after hours. Continued AI data-center beneficiary.
  • Rockwell Automation - Strong beat ($3.30 vs $2.88 est), 9% organic sales growth, raised guidance, +9% on print. Cleaner AI-industrial play than Eaton.
  • KKR - EPS $1.39 vs $1.26 est; $28B fundraising, returned $20B of capital despite weak exit backdrop. Best-of-breed with little to nitpick.
  • Apollo - Mixed quarter (FRE +30%, SRE -13%), but it has the least software exposure among PE/private credit peers and is moving to daily pricing of investment-grade, direct lending, and ABF assets - a real differentiator.
  • TransDigm - $9.85 vs $9.11 EPS beat, raised Q2 guidance, +4%. “Very good company” riding the same aerospace aftermarket tailwind as GE Aerospace.
  • Disney - EPS $1.57 beat, parks +6.7% revenue despite war news, entertainment +9.7%; stock up on print. Note the long-term frustration: stock is where it was 10 years ago.
  • McDonald’s - 3.8% same-store sales growth shows it is navigating the tough consumer environment.
  • Diamondback Energy - Raising oil/gas production targets; Q2 EPS expected to grow >100% on higher prices.
  • Arista Networks - Beat on EPS and revenue, Q2 in-line guide; fundamentals fine but stock had run too much (+30% YTD, +70% 1-yr) for the print to push it higher. Watch for pullbacks.

Stocks to avoid / be cautious on

  • Palantir - Strong quarter (EPS +154%, revenue +85%) but stock still -7% on print and -22% YTD; trades at 100x 2026 PE. The negative AI-software narrative dominates regardless of fundamentals.
  • Shopify - Revenue +34% but missed net income, weak Q2 guide, -15% on print, -30% YTD. Caught in the software downdraft.
  • PayPal - Guided Q2 EPS down 9% vs consensus -4%; -8% on print, -20% YTD. Apple Pay/Google Pay continue to erode it.
  • Fiserv - EPS -16% YoY, organic revenue -4% vs -2% est; stock -9% on print, -15% YTD, down from $120 to $57. “No sign things are getting better” - avoid the turnaround story.
  • Eaton - Only 3% EPS growth, Q2 guide light; stock had run +30% and got hit. Prefer Rockwell here.
  • Shake Shack - Break-even vs $0.14, revenue miss, -30% on news.
  • Whirlpool - Loss of $0.56 vs $1.70 profit, slashed guidance from $6.00 to $3.50; -12%. Housing-related names “pretty much all problematic.”
  • Zillow - Guided Q2 EBITDA well below consensus; CFO says housing market “effectively flat” with no improvement planned.
  • FedEx and UPS - Hit -8% and -9% on news that Amazon is opening its logistics network to non-Amazon sellers; structural threat just got bigger.
  • GameStop / eBay - Eisman expects eBay to reject GameStop’s $60B bid (eBay is 4x GameStop’s size). Michael Burry already exited GameStop over the debt load the deal would require.

Sector-level cautions

  • Software broadly is problematic because of AI fears, even when fundamentals are strong (see Palantir, Shopify).
  • Private equity / private credit’s biggest risk is software exposure - public software stocks down 50%+ implies their portfolio companies are worth less than half of cost; refinancings will force more equity or walk-aways. Apollo is the relative safe harbor.
  • Payments outside Visa/Mastercard is a value trap given competitive intensity.

Chapter Summaries

  1. Sponsor reads and Premium launch announcement - Eisman pitches Ground News and announces “The Real Eisman Playbook Premium” launching May 15 with a “Conspiracy of Credit” masterclass connecting private credit to the 2008 GFC. Free Mon/Fri episodes continue unchanged.

  2. Macro and headline news - Oil spiked Monday on Strait of Hormuz attacks then fell back below $100 Brent by Thursday as Trump claimed the Iran war is over. S&P +7% YTD, Nasdaq +10% YTD. Amazon is opening its logistics network to non-Amazon sellers, hammering FedEx (-8%) and UPS (-9%). GameStop bid $60B for eBay (4x its own size); Eisman expects rejection, and Michael Burry sold his GameStop position.

  3. State of the quarter - With 300+ S&P names reported, all 11 sectors beat Jan 1 revenue estimates; S&P revenue growth 10.5% (vs 7.5% est), InfoTech 28.7% (vs 20% est). 8 of 11 sectors beat EPS estimates (Staples, Energy, Healthcare missed). Forward operating margins at all-time high 20%. Eisman’s K-shaped thesis: tech dominance (35% pure InfoTech, ~50% with adjacencies) means low-end consumer weakness doesn’t move the index.

  4. Individual earnings - Palantir (good numbers, stock punished), TransDigm (beat, raised), KKR (clean beat), Apollo (mixed - FRE strong, SRE weak; new daily pricing initiative), Eaton (disappointing), Rockwell (strong), Diamondback (raising production), PayPal (bad guide), Fiserv (deteriorating), Shopify (weak guide), Arista (in line), AMD (strong beat and raise), Disney (decent across all segments), McDonald’s (good), Shake Shack (bad), Whirlpool (disaster), Zillow (weak housing read).

  5. Mailbag - On Schiller PE >40 and market-cap-to-GDP >200%: traditional valuation metrics look stretched, but tech’s growing index weight mechanically inflates them. Not overly concerned as long as tech delivers; reverses if a recession appears.

  6. Upcoming interviews - Strategas team on the rally, and Kelsey Zoo (Autonomous) on the FICO war: FICO has raised credit-score pricing 1,500% in five years, which Eisman calls one of the most egregious monopolistic acts he has ever seen.