#STOCKANALYSIS | Everyone Is Watching AI. I’m Watching the Consumer.

There’s no shortage of companies investors want to own right now.

AI. Semiconductors. Data centres. Software.

But I think one of the more interesting investment questions is sitting somewhere much less exciting:

How healthy is the consumer?

The U.S. consumer has been surprisingly resilient. August retail sales jumped 1.2%, with spending increasing across a broad range of categories. That sounds positive—and it is—but the bigger question is whether consumers can keep spending if borrowing costs and everyday prices remain elevated. 

That’s where I think “boring” companies become interesting.

Think about businesses selling cars, home improvement products, travel, restaurants, clothing or household goods.

Their earnings aren’t driven by whether the latest AI model is better than expected.

They depend on something much simpler:

Will people actually spend the money?

And right now, there are some mixed signals.

On one hand, retail spending remains solid.

On the other, higher Treasury yields are pushing up borrowing costs, while consumers are becoming more sensitive to prices. The Federal Reserve has also raised its benchmark rate to 3.75%–4.00%, with further increases still being discussed. 

That creates an interesting situation for consumer companies.

A business can raise prices to protect margins—but eventually customers may buy less.

It can offer discounts to protect sales—but margins suffer.

It can keep prices stable—but higher input, labour and financing costs can squeeze profits.

So when I look at a consumer company, I don’t just want to know whether revenue grew.

I want to know how it grew.

Was it more customers?

Higher prices?

Bigger purchases?

Or simply inflation?

And what happens if the consumer starts pulling back?

The Fed’s latest Beige Book also showed this split. Consumer spending was described as growing slightly overall, but businesses reported heightened price sensitivity. Auto sales were mostly subdued, with high fuel prices and rising financing costs weighing on demand, while tourism remained relatively strong. 

That tells me the consumer isn’t simply “strong” or “weak.”

It’s becoming selective.

And that could create a bigger divide between companies.

Businesses selling essential products may have more pricing power.

Companies targeting higher-income consumers may have more resilience.

Businesses dependent on financing or discretionary purchases could be more exposed to higher rates.

That’s why I think the next interesting stock opportunity may not necessarily be the company growing the fastest.

It could be the company where the market is underestimating how durable demand really is—or overestimating how quickly consumers will cut back.

For me, the key numbers to watch are:

Revenue growth → pricing → volumes → margins → consumer credit.

The headline earnings number only tells part of the story.

Everyone is watching what AI can change over the next five years.

I’m also interested in something much more basic:

What are people still willing to spend money on when money gets more expensive?

That answer could tell us a lot about which consumer companies deserve attention next.

What part of the consumer do you think is most resilient right now—essential goods, travel, restaurants, housing or big-ticket purchases?