Things Go Better With Coke
* One of my primary surprises for 2026 expected strong outperformance in consumer staples…
Surprise #3: The AI economy and (a heavily weighted and imbalanced) stock market dependent on AI show signs of interruption, then disruption
The AI bubble bursts as the circular financing deals unwind (or are pushed out) — AI capital spending slows abruptly as return on investment concerns emerge as power generation and grid modernization are bottlenecks. Depreciation charges and lower demand wrecks havoc with consensus AI 2026-27 earnings per share expectations. Another big AI surprise would be if China decides to flood markets with inexpensive AI models — pressuring the ultimate and expected robust ROI forecasts (which are already in question by some skeptics).
OpenAI’s Sam Altman finds a place to live right next door to Sam Bankman-Fried. His effort to make OpenAI too big to fail, fails. ChatGPT turns out to at best be a commodity large language model purveyor. It becomes obvious to all that its recent $500 billion-plus valuation can’t be supported. Without an ability to do a down round without losing face, OpenAI loses all access to capital. Ultimately, a consortium of its customers and suppliers takes it over to modify its business plan and reduce the cash burn.
With Altman tossed to the curb (or worse), the prosecutions begin.
OpenAI’s problems pushes a deeply committed (to OpenAI) Softbank to the verge of collapse.
Nvidia shares fall by -40% as CoreWeave (CRWV) is driven into bankruptcy.
A basket of defensive consumer nondurable equities ( (PEP) , (KO) , (PG) and (KMB) ) materially outperform the Mag 7 by a decisive amount.
The shares of (boring and previously hapless) PepsiCo outperform most other staples and 90% of the S&P Index after a much better skein of organic unit growth and as its core business is rationalized.
– Kass, 10 Surprises for 2026
Position: Long KO (S)
