EPS: Structural, Cyclical or a Bubble?

Research evidence excerpt

EPS: Structural, Cyclical or a Bubble?

25.0%

300.00acceleration is even greater. In Dec'25, investors expected Taiwan's EPS to

grow ~20% vs today's ~45%, and for '27, estimates were raised from 19% 200.00100.00 20.0%

to 28%, while Korea has gone parabolic. 3. But, in markets were AI trade is - Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Dec-24 Jun-25 Dec-25 15.0%

weak, EPS remained subdued and/or were revised down. India, for macro Capex + R&D Expenditures (US$bn)

and FX reasons, has seen one of the sharpest drops, with growth falling % Of Revenue

over the last six months from ~16-17% to ~11%, although '27 was boosted Source: Factset; Macquarie Global Strategy

from ~15% to ~18%. Similarly, Indonesia's EPS expectations dropped from

MXWD EPS - Strong acceleration~8% to zero; unchanged at ~7-8% in '27. Broadly the same occurred in

the Philippines while expectations remained flat in Malaysia (~8-9%). For 450

structural reasons (mostly AI related), Japan's EPS increased from ~10% 400350

in Dec'25 to ~15% but '27 estimates remained flat (~10-11%). Given that 300

MXCN is dominated by old industries with few start-ups, EPS are stagnant 250

(~12-13%). 4. In times of cyclical expansions or at the top of a bubble, 200150

investors raise risk premia and lower PER. In more extreme cases, this has 100Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 Jan-26

occurred. For Korea, retail whiplashes and the perception of a cyclical high, 20222025 EPSEPS 20232026 EPSEPS 20242027 EPSEPS

lowered PER from 10x to below 7x while SPX multiples are down to ~20x.

Source: Datastream; Macquarie Global Strategy

Cyclical, structural or a bubble? All three. We view AI as a series of rolling