The Market Is Splitting in Two—and AI Is Driving the Divide

October 13, 2026 — The biggest technology stocks continue to dominate the market, while small caps, rate-sensitive businesses and parts of the real economy are telling a very different story.

Zach Abraham and Chase Taylor break down an increasingly divided market: the Magnificent Seven reaching another record while small caps lag, crowded positioning between the Nasdaq and Russell 2000, and why Chase says he’s becoming more bullish on parts of the AI trade after months of valuation concerns.

They also debate the enormous spending behind the AI buildout, what investors may be overlooking in hyperscaler economics, whether chip earnings can continue justifying current prices, and why an economy increasingly divided between AI-linked businesses and rate-sensitive sectors may make the major indexes harder to read.

Plus: energy risks, diesel prices, inflation, interest rates and what the bond market may be signaling next.

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