Tech Sell-Off, AI Trade Fears and Amb. Tilman Fertitta

CoreWeave

Across the shows: 83 speakers in other episodes, 23 bullish and 89 bearish calls, past 30 days

• Paul Meeks · Freedom Capital MarketsBullish

  CoreWeave's fundamentals are strong; the selloff has gone too far if it gets funded.

  Meeks says the negative narrative is a self-fulfilling doom cycle, with creditors worried about repayment making borrowing for AI build-out more expensive. He projects sales growing from $5 billion last year to $42 billion in three years, with an EBITDA margin near 70% in 2028. CoreWeave funds data-center build-out through special purpose vehicles backed by investment-grade hyperscaler cash flows, which borrowed around 6% a couple of months ago, with wider spreads now. He expects sequential EBITDA margin improvement at earnings next week and more by Christmas, which should make lenders comfortable. He is not sure about the stock price, and says the market is taking the selloff way too far.

  “here's a company that last year did 5,000,000,000 in sales. In three years, they'll do $42,000,000,000 in sales. And I have them in that, 2028 period doing an EBITDA margin of close to 70%, which is a good business.”at 33:50

• Paul Meeks · Freedom Capital MarketsBullish

  Credit risk has worsened, but customer demand fundamentals are strong enough that he would not pause for anyone else.

  Meeks acknowledges the company's credit risk is real and has gotten worse over time, so he won't downplay it. He still feels strongly about the fundamentals, particularly demand from its customers, and says that if it were any other company he would not even have paused. The bullish view is therefore conditional on customer demand offsetting the rising credit risk. The company is inferred from the earlier discussion of neocloud credit concerns, since this excerpt does not name it.

  “So I am not fool enough to downplay the credit risk. Yes. It's gotten worse over time, but I feel strongly about the fundamentals, particularly the demand from its customers.”at 36:28

Invesco QQQ Trust (Nasdaq-100 ETF)

Across the shows: 3 speakers in other episodes, 1 bullish and 1 bearish calls, past 30 days

• David Spika · Turtle Creek Wealth AdvisorsBullish

  Nasdaq is a financial tech and index-licensing business, not an AI play, and a good non-AI pick.

  Spika says Nasdaq is not an AI play. Its market infrastructure is what it is known for, and it does better when trading volumes are higher, so a day like this is not necessarily a boost. He argues it is turning into a financial tech company with mission-critical software, data and analytics that help clients with compliance, regulatory issues and risk management. He also stresses its index business, which earns licensing fees from the indices and the ETFs built on them. Together these make it a non-AI idea that holds up in the sell-off.

  “they're also turning into a financial tech company with software and data and analytics. And so mission critical software that helps with things like compliance and regulatory issues and risk management.”at 38:01

W.W. Grainger

• David Spika · Turtle Creek Wealth AdvisorsBullish

  Grainger is a non-AI winner after a blowout quarter and very strong free cash flow.

  Spika describes Grainger as a provider of the tools and services that industrial companies need to operate. The company reported a blowout quarter the morning before the sell-off, and the stock was at all-time highs. He stresses it is producing very strong free cash flow, which he says is what investors are looking for and is true of all the names he is recommending. The case rests on earnings momentum and cash generation rather than AI exposure.

  “They provide the tools and services that industrial companies need to operate. And so they came out yesterday, had a blowout quarter. They're producing very strong free cash flow.”at 38:38

Motorola Solutions

• David Spika · Turtle Creek Wealth AdvisorsBullish

  Motorola Solutions has a strong growth opportunity from public-safety digitalization and modernization.

  Spika says Motorola Solutions, which is separate from the phone maker, provides services to police, fire and government entities. Those offerings cover cybersecurity, data analytics, video surveillance and AI-enhanced solutions. He argues these public entities need to move up the curve on digitalization and modernization, which gives the company a great opportunity for growth. He presents it as one of three non-AI ideas that still benefit from technology adoption.

  “they provide services to police, fire and government entities for cyber security, for data analytics, for video surveillance and AI enhanced solutions. So these entities need to get up the chain and get up the curve when it comes to digitalization and modernization.”at 38:58

US stock market outlook

• Ryan Detrick · Carson Group

  Still optimistic: breadth holds up and November is historically strong after a weak October.

  Carson's tactical model is about 68% equities and the firm is overweight equities. Breadth still looks healthy: 72% of S&P 500 stocks were above their 50-day moving average the prior day. The selloff is driven by tech, which is 37% of the index and down 7%. Nine of 11 sectors outperformed the S&P that day. Detrick notes October was lower in this midterm year, but that has never historically been followed by a lower November, which is usually a good month.

  “I think the thing is, yes, we're still optimistic here. We don't need any major changes.”at 4:18

• Tilman Fertitta · U.S. Embassy in Italy

  Today's selloff is a buying opportunity; he is not selling and is buying the dip.

  Fertitta says the selloff is just a blink and that stocks are at a buying opportunity. He owns billions of dollars of stock and is not selling. He points to his portfolio's best growth coming from buying during the 1999–2000 tech crash and the 2008–2009 crisis. He sat out only 2020, when his businesses shut down and he kept dry powder for payroll.

  “you've got to take this as an opportunity to buy. This is just a blink. It's closing your eyes for a day. And if you look at where stocks are, it is a buying opportunity.”at 19:49

US rates & the Fed

• Steve Sosnick · Interactive Brokers

  Fed is unlikely to rescue stocks; the Fed put covers banks and credit, not equities.

  Sosnick reviews the Bespoke comparison episodes and says the Fed rescued markets in several of them. He argues the Fed put applies to the banking system and credit markets, not to the stock market. This Fed does not appear to be riding to the rescue, so a prolonged selloff would not be cushioned by policy.

  “The problem is if the Fed's not riding to your rescue and this Fed does not appear to be doing that, remember, the Fed put applies to the banking system and the credit markets, not the stock market.”at 7:03

• Tilman Fertitta · U.S. Embassy in Italy

  High interest rates are killing the housing market, which in turn kills the economy.

  Fertitta says the president wants interest rates down. Inflation is rising at the same time, and high rates are killing the housing market. He argues that if high rates kill housing, they kill the economy. He ties the fix to lowering inflation and energy costs.

  “just like he wants interest rates down. People at the same time that inflation is going up, you're killing the whole housing market. If you kill the housing market with high interest rates, that kills the economy.”at 23:49

AI infrastructure & data centers

• Steve Sosnick · Interactive Brokers

  Midterm results threaten the AI data-center build-out; backlog orders may not be realized.

  Virginia, Georgia, Ohio and Texas, the four states with the most AI build-out, all turned blue. The incoming Texas governor wants a moratorium on new development, though projects with shovels already in the ground would continue. Sosnick questions when the large backlog of orders will be realized. He calls this an existential, fundamental change, unlike the tariff reaction, which the market recovered from quickly. Fundamental shocks take a long time to bounce back from.

  “The four states that see the most AI build out, Virginia, which had a blue governor before, but Georgia, Ohio, Texas all turned blue. And in the case of the governor elect of Texas, she wants to put a moratorium on new development.”at 9:05

• David Spika · Turtle Creek Wealth Advisors

  Texas will not impose a data center moratorium; it's a campaign talking point that would kill the state's growth.

  Spika says he does not believe Texas Governor Gina Hinojosa's pledge to put a moratorium on data centers will come to pass. He calls it a campaign-trail talking point. He argues Texas's economy has benefited substantially from technology in general and from data centers and AI growth specifically. He reasons that politicians want to get re-elected and keep Texas blue, so the state will not kill the golden goose.

  “Gina Hinojosa saying she's going put a moratorium on data centers. I don't believe that. That was a campaign trail talking point. Texas's economy has really benefited from technology in general, and specifically from data centers and the growth of AI.”at 39:37

Market sentiment, positioning & volatility

• Steve Sosnick · Interactive Brokers

  Retail investors are buying tech dips, including neoclouds and chips, which makes him nervous about forced stop-outs.

  Sosnick says retail investors accelerated their buying last week, including a lot of Alphabet into the sell-off. They have been buying Nvidia, chip names, memory names and neoclouds as well. He has noticed that stocks which sell off on good earnings tend to recover within a day or two, while those selling off on bad news, such as Alphabet and Intel, do not. With some of these stocks down 5% to 20%, he expects stop-loss orders to be triggered. That is why the continued buying makes him nervous, since forced selling could follow.

  “They have been buying all of them, which kind of makes me nervous when I hear what Kate just said because I do think a lot of them... some of that is going to be either, you know, if not for selling, it's going to be... all kinds of stops being triggered.”at 42:26

• Steve Sosnick · Interactive Brokers

  Leverage is the worst enemy in a downturn, since margin calls force selling at the worst time.

  Sosnick says margin debt has been at an all-time high, held by both individuals and institutions. He argues that people love leverage when it works, but it becomes the worst enemy in a downturn. If you paid cash and a stock falls, you have discretionary decisions. If you bought on margin, you are forced out of trades or face margin calls, which is extraordinarily uncomfortable. He thinks the market periodically needs to reset its attitude toward leverage, since people fall out of love with it at the worst moment.

  “Margin debt has basically been at an all time high. That's individuals and institutions... The problem is leverage is your worst enemy in a downturn because, you know, here's the thing. If you own a stock and you paid cash for it and it goes down, you got decisions to make.”at 43:05

US dollar

• Ryan Detrick · Carson Group

  The dollar is not bidding during this selloff, a minor positive signalling no systemic stress.

  In past severe selloffs the dollar typically rallied as a safe haven. Here it is slightly down, and Detrick reads that absence of a dollar bid as a minor positive, a sign the selloff is not systemic stress.

  “Look at history. When you have really bad sell offs, you need to get more of a bid in the dollar. We're not seeing that.”at 4:18

AI bubble & tech valuations

• Steve Sosnick · Interactive Brokers

  Market has shifted from unquestioned AI spending to demanding ROI, a secular change in mindset.

  Sosnick says investors used to accept any AI spending as good and assume it would return value. Now they ask what the ROI will be, and in some troubled cases whether investors will get their capital back. He calls it a big secular change in mindset. With everyone fully invested in the AI trade, there is no one left to absorb selling when sentiment turns.

  “[The narrative] went from all money that was invested or spent on AI is good and will return whatever. We never really question the whatever. So all of a sudden is, what is that ROI going to be?”at 6:30

Banks

• Ryan Detrick · Carson Group

  Bank stocks are breaking out of a 19-year consolidation, a positive despite today's selloff.

  Detrick says banks are being hit today only because everything is being hit. He argues the sector is breaking out of a roughly 19-year consolidation range, and he still sees positives in financials, industrials and healthcare.

  “But banks are breaking out of a nineteen year kind of consolidation. I still think there's some positives out there with financials, industrials, healthcare.”at 11:20

Healthcare system & insurers

• Ryan Detrick · Carson Group

  Healthcare is Carson's largest overweight and acts as the anti-AI trade.

  Healthcare is Carson's largest sector overweight. Detrick calls it the anti-AI trade, so it should hold up while the AI-heavy tech trade sells off. He cites it alongside financials and industrials as areas with positives.

  “Healthcare is our largest overweight. That's kind of the anti AI trade, if you will.”at 11:20

US growth & recession risk

• Tilman Fertitta · U.S. Embassy in Italy

  US growth is strong and outpaces Europe; no administration change will slow it.

  Fertitta compares America's growth with the rest of the world, especially Europe. He notes Germany's entire stock market is worth less than Apple. He argues American growth is great and will not slow regardless of which party controls the House or presidency, because American companies have grown through all administrations.

  “Texas economy, it's kind of it's American... Germany's whole stock market isn't even worth as much as Apple. So America's is great, and it's not gonna slow anything down.”at 16:35

Natural gas & LNG

• Tilman Fertitta · U.S. Embassy in Italy

  Italy needs LNG and oil; it is becoming Europe's LNG gateway because energy drives growth.

  Energy costs in Italy are high and the country is struggling. Fertitta argues energy is what drives growth, as it did for America's growth before tech. Italy is becoming the gateway for LNG into Europe because it recognises that energy is growth. Every new building needs energy to run, and Italy is even looking at small nuclear plants. Growth depends on LNG and oil, so U.S. LNG projects must proceed.

  “You got to have LNG and you gotta have oil. And Italy is the gateway to Europe with LNG and realizes the importance of it, but still, they're struggling here right now.”at 17:48

Renewables & clean energy

• Tilman Fertitta · U.S. Embassy in Italy

  Alternative energy has not worked; energy needs cannot be met without LNG, oil and nuclear.

  Fertitta argues that alternative energy sources have been shown not to work. You cannot solve energy needs with alternative sources alone, so the answer is LNG, oil and small nuclear plants. He says the answer for Italy's energy costs should come from the fossil fuels and nuclear it can build.

  “Well, it has to. Okay? Because you can talk about all the other types of energy there is. And I think that we proved that they really don't work.”at 17:48

US consumer

• Tilman Fertitta · U.S. Embassy in Italy

  The US consumer has not cracked; restaurants are doing extremely well, though travel is soft.

  Fertitta says the consumer has not cracked. His restaurants are doing extremely well. Vegas is softer because airfare and gasoline are expensive. He sees fuel costs as the biggest issue hurting travel. He does not follow the consumer daily, but he still gives a clear read on restaurant demand.

  “The consumer has not cracked at all. Okay? Restaurants are doing extremely, extremely well. Vegas is a little soft only because it's so expensive to buy an airline ticket to get there right now or to fill up your car in California.”at 22:30