Tech Stocks Slide as AI Capex, Apple Earnings and Oil Drop Dominate Headlines 11/2/26

Invesco Leisure and Entertainment ETF

• Todd Sohn · Baird StrategasBullish

  PEJ gives oil-sensitive travel and leisure exposure that works if oil keeps falling.

  If oil continues to decline, the opportunistic trade is consumer discretionary and airlines, since these are the stocks most sensitive to oil. PEJ is an Invesco ETF full of travel and leisure companies that are sensitive to the price of oil, and it is the firm's go-to for consumer discretionary exposure. The call depends on oil falling, and rates are a separate variable.

  “It's an Invesco ETF. It's full of travel and leisure companies that are sensitive to the price of oil.”at 8:31

Amazon.com

Across the shows: 32 speakers in other episodes, 40 bullish and 7 bearish calls, past 30 days

• Brian Nowak · Morgan StanleyBullish

  Amazon is his top idea because AWS will enable Gen AI diffusion, which is underappreciated.

  AWS accelerated to almost 40% growth, and management talks about confidence in 40%-plus growth in 2027 and 2028. AWS could reach a trillion dollars of revenue in five to ten years. Enterprises adopting Gen AI tools all run through AWS and Azure, which is why he thinks the hyperscale business is underappreciated. He also sees the retail business gaining share and becoming more efficient through Gen AI and robotics.

  “Our top idea right now is Amazon. I think that what we're really underappreciating on Amazon is that Amazon Web Services is going to be a critical enabler of Gen AI diffusion across the economy.”at 20:47

Apple

Across the shows: 21 speakers in other episodes, 9 bullish and 17 bearish calls, past 30 days

• James Demmert · Main Street ResearchBullish

  Apple is a bullish safety holding at 35x earnings, but it is vulnerable if margins slip.

  Apple has been treated as a safety trade, away from the AI capex ROI drama that he thinks the market has overblown. At about 35 times earnings it is not cheap, so margins matter. iPhone gross margins are about 15%, and the stock is vulnerable if Apple cannot maintain them amid rising memory prices. His fund owns the stock and is bullish.

  “it's trading at 35 times earnings. It's not cheap... margins which are about 15% on the iPhone, they can maintain those. I think the stock is vulnerable if they cannot. But we own it, we're bullish.”at 25:07

Palantir Technologies

Across the shows: 5 speakers in other episodes, 3 bullish and 2 bearish calls, past 30 days

• James Demmert · Main Street ResearchBullish

  Palantir should roughly double revenue this quarter, and at 80x earnings the valuation is still reasonable.

  The stock is down about 50% this year, so it has been clobbered. He expects Palantir to double year-over-year revenue this quarter. Growth in government is strong, and commercial growth through health care and financial services is worth watching. At 80 times earnings it is not cheap, but its P/E is below its growth rate, one of the first times that has been possible. That makes him bullish, and he sees strong prints as the revival tech needs.

  “Boy, I think they're going to double revenue... at 80 times earnings, that is not cheap, but it's one of the first times you've been able to buy the stock at a PE lower than its growth rate.”at 25:28

US stock market outlook

• Jonathan Golub · Seaport Research Partners

  S&P earnings are strong and multiples compressed, so he would bet on upside despite weak internals.

  S&P 500 earnings are up almost 35% year to date while the multiple has fallen about 25%. Earnings estimates keep being revised higher, and this quarter's earnings are expected to grow about 33%. He is still watching weak market internals and an earnings beat of only about 2%, versus a 7.5% decade average and 12.5% last quarter. He says this is not a washout and that if he had to bet, he would bet on the upside.

  “The earnings on the S and P are up almost 35% year to date and the multiple is down 25%... they continue to be revised higher... If you had to make a bet, I would bet on the upside”at 5:52

• Todd Sohn · Baird Strategas

  Investors should shift from cap-weighted to equal-weight, favoring healthcare and some energy over tech.

  Leadership has shifted to defensive sectors such as staples, health care and energy, more defensive than ever seen. Baird Strategas is recommending equal weight over cap weight, favoring healthcare and a bit of energy, to manage tech risk and diversify away from the large-cap tech concentration.

  “Go more equal weight over cap weight.”at 7:28

AI infrastructure & data centers

• Brian Nowak · Morgan Stanley

  Hyperscaler capex will rise from about $1T in 2026 to $1.5-1.6T in 2027, with one more step-up.

  Hyperscalers are expected to spend about $900 billion to $1 trillion in 2026, rising to $1.5-1.6 trillion in 2027, about 60% growth. Morgan Stanley's bottoms-up model counts chips, racks, data center construction and power costs. He expects one more significant CapEx step-up in the fourth quarter, when companies give 2027 visibility, and says Morgan Stanley's numbers are above consensus in some cases.

  “I think they'll be raising CapEx significantly one more time in the fourth quarter because at that point, all of them will give visibility into 2027 CapEx.”at 17:58

• Brian Nowak · Morgan Stanley

  The 2028 capex step-up will be much smaller than 2027, but spending is not falling off a cliff.

  He expects a big step-up in capex in 2027 but a much lower step-up in 2028, for several reasons including constraints. He argues this is not a cliff, just slower growth. The market is pricing in when the last big second-derivative step-up in spend comes, which he says is 2028.

  “while there's a big step up in CapEx in 'twenty seven, I think the step up in CapEx in 'twenty eight is much lower for a variety of reasons... It's not a cliff. It's just not going to grow as much.”at 19:35

Middle East & Iran

• Richard Goldberg · Foundation for Defense of Democracies

  Iran's apparent terms look like the last MOU, so a lasting peace deal is unlikely.

  The president is keeping maximum optionality, letting Qatar run diplomacy while forces are positioned for military action. In the leaks of Qatari-Iranian talks, he has seen no terms materially different from the summer MOU. That MOU was signed when Iran had the upper hand and Hormuz was closed. Today the US has reopened the Strait by force and has a blockade in place, so a dressed-up version of the same MOU is hard to imagine the president accepting.

  “I have yet to see anything out of the leaks of these Qatari Iranian negotiations that shows any terms that the Iranians say they're agreeing to that are materially different than that summer memorandum of understanding.”at 28:45

• Richard Goldberg · Foundation for Defense of Democracies

  Iran's finances are strained and it is likely stalling for the US election to change outcomes.

  Based on public statements, he assumes Iran is not making payroll and cannot pay its soldiers. Iranian leaders are probably telling people to hold on until the November 3 election, with the hope that a Democratic Congress will change the outcome. That is why the US president probably has time to wait out the pressure, and why Iran may hold out until January.

  “I assume they are not making payroll. And so one of the best the president probably has is they're going to get to election day.”at 31:19

AI chips & semiconductors

• Jonathan Golub · Seaport Research Partners

  Semis and hardware fundamentals are strong, but the falling stocks show the market doubts the long-term story.

  Semis and hardware stocks are falling even though their fundamentals are really strong. He reads this divergence as the market not believing the long-term story, and as a sign that the internals are weaker than the headline indexes suggest.

  “So when you see semis and hardware down and the fundamentals are really strong, it's basically telling you the market doesn't believe the long term story.”at 3:14

Market sentiment, positioning & volatility

• Todd Sohn · Baird Strategas

  Crowded tech positioning and high expectations will unwind sharply, with thematic ETFs peaking June to September.

  Very high expectations are meeting very aggressive tech positioning, and when they collide with expectations not being met, a massive unwind results. Thematic ETFs have all peaked between June and September. Levered notional has fallen about 25% from its summer peak, and an inverse ETF volume spike on Friday is close to capitulation levels, though not quite there yet.

  “I look at this as very high expectations meeting with very aggressive positioning in tech. And when both of those collide and you have an unwind in positioning and expectations not being met, it results in a massive, massive unwind.”at 4:53

Manufacturing & industrial policy

• Jonathan Golub · Seaport Research Partners

  Industrials have strong fundamentals that the stocks have not yet reflected, so he would go long.

  Big chunks of the industrial space have terrific fundamentals, and so do hardware and semis, yet the stocks are not moving with them. Because the consumer is stretched, he prefers industrials to consumer names and says he would go long industrials.

  “big chunks of the industrial space, hardware and semis, the fundamentals are terrific. The stocks are not moving along with that... I'd go long industrials.”at 8:43

US consumer

• Jonathan Golub · Seaport Research Partners

  The US consumer is stretched and confidence is weakening despite good employment.

  He describes the consumer as stretched and says confidence is weaker, even though the employment picture is pretty good. This is the reason he prefers industrials to consumer exposure.

  “the consumer is stretched, confidence is weaker, even though the employment picture is pretty good.”at 8:54

US growth & recession risk

• Jonathan Golub · Seaport Research Partners

  Strong GDP and internals mean the economy is not heading into recession.

  Third-quarter GDP came in at almost 3.5%, which he calls an insanely good number. The internals look more like the economy is growing at about 5%. From this he concludes the economy is not heading into recession, though he says investors need to watch consumer weakness.

  “...GDP came out at almost 3.5% growth, that's like an insanely good number last week. And if you look at the internals, the internals look more like the economy is growing at 5%. So we're not heading into a recession.”at 9:54

AI bubble & tech valuations

• Brian Nowak · Morgan Stanley

  The AI selloff reflects ROIC doubts, and power and semis are the first names investors sell.

  Investors are concerned about the return on invested capital from all the AI capex, and they want to know which company will deliver faster revenue growth. The sharp declines in AI infrastructure names are a symptom of that concern. Historically, the power, silicon and hardware names are the first to be sold when the market doubts revenue will justify early spending. He says the software and infrastructure layers need to produce more revenue and ROIC, and this is what the market will look for going into 2027.

  “I think there are growing concerns about the ROIC or revenue that can be generated by all of this CapEx.”at 14:31