CABLE , E2E , AEROFLEX IND , THERMAX , KRN HEAT ; JEFFERIES' CHRIS WOOD WARNS ON AI STOCK VALUATIONS; URGES INVESTORS TO DIVERSIFY BEYOND AI 🔴

• AI EARNINGS SLOWDOWN: Global AI stocks' earnings growth is projected to slow sharply from nearly 100% in 2026 to 30% in 2027 and 22% in 2028. • VALUATION CONCERNS: Global AI stocks trade at approximately 23x forward earnings compared with 13x for non-AI stocks. • NON-AI EARNINGS: Earnings growth for global non-AI stocks is projected at 16% in 2026 and 9% in both 2027 and 2028. • RISING FINANCING COSTS: Jefferies warns that higher borrowing costs could threaten the sustainability of AI infrastructure spending. • ORACLE CREDIT RISK: Five-year CDS spreads increased to 288 bps from 186 bps on September 11. • COREWEAVE CREDIT RISK: Five-year CDS spreads jumped to 1,118 bps from 749 bps, while its 2032 bond yield reached 14.8%. • AI MARKET MOMENTUM: Emerging-market AI stocks delivered 81% returns over the year to June, but momentum slowed significantly in H2 2026. • PORTFOLIO STRATEGY: Chris Wood favours diversification beyond AI, retaining selective semiconductor exposure while avoiding excessive exposure to companies undertaking heavy AI capital expenditure. IMPACT: CAUTIOUS / NEGATIVE FOR HIGH-VALUATION AI STOCKS 🔴 Jefferies is not predicting the end of the AI boom. Its concern is that slowing earnings growth, expensive valuations and rising financing costs could trigger a shift towards reasonably valued non-AI sectors.

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