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Eagle Capital says AI enthusiasm boosts earnings, but raises valuation risk
The firm also flagged that AI-linked semiconductor equipment depreciation can make reported earnings look stronger than underlying free cash flow, and it said Intuit closed Aug. 18 at $350.41.
Eagle Capital Management, in its second-quarter 2026 investor letter, said enthusiasm for AI capital spending has helped drive strong S&P 500 earnings growth, but it also warned that elevated valuations, concentrated demand, and aggressive investment assumptions are increasing risk.
The asset manager said it believes current earnings can overstate underlying economics because semiconductor equipment is depreciated over several years, while free cash flow growth remains much weaker.
Eagle also expects competition and additional capacity across AI labs, hyperscalers, and semiconductors to produce winners and losers over time. It said it prefers building a portfolio that can perform across multiple outcomes instead of relying on a single forecast.
In the letter, Eagle highlighted Intuit Inc. (NASDAQ: INTU), noting that Intuit closed Aug. 18, 2026 at $350.41 per share and that its QuickBooks bookkeeping software remains central for small and midsize businesses.
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