Why The Tech Selloff Just Reversed Course

CoreWeave

Across the shows: 21 speakers in other episodes, 6 bullish and 15 bearish calls, past 30 days

• John Mowrey · NFJ Investment GroupBearish

  CoreWeave is highly exposed as a debt-laden neocloud; will be hit hardest by any capex slowdown or higher rates

  Mowrey says the recent selloff reflects credit-market concerns around CoreWeave's bonds, and that neocloud companies, which are specialised data-centre operators, carry a lot of debt. If the economy or AI capex slows even a little, these firms will be the most exposed. He ties this to a 10-year Treasury yield above 5%, which directly raises the cost of capital for the most debt-financed companies. Hyperscalers can largely self-finance, so they are less affected. He concludes CoreWeave-type names are rightly being treated with caution.

  “these companies that are very exposed to kind of the neo cloud build out... those have a lot of debt. And if you have slowdown in the economy or a little bit of a slowdown in, you know, CapEx spending, those are gonna be the most exposed”at 3:45

Texas Instruments

• John Mowrey · NFJ Investment GroupBullish

  Texas Instruments is an attractive, over-punished semiconductor stock growing over 50% with a 2% dividend yield

  Mowrey argues that many AI-linked stocks have been over-punished and that the semiconductor space has attractive names. He points to Texas Instruments, which he says is growing at over 50% year over year and pays a 2% dividend yield. He presents this as evidence of an opportunity created by the recent dislocation.

  “you've got stocks like Texas Instruments. The stock is growing at over 50% year over year, 2% dividend yield.”at 5:38

NVIDIA

Across the shows: 18 speakers in other episodes, 14 bullish and 7 bearish calls, past 30 days

• John Mowrey · NFJ Investment GroupBullish

  Nvidia, the standout chip stalwart, trades under 15 times forward earnings, which is attractive

  Mowrey calls Nvidia the standout stalwart of the semiconductor group. He says it trades under 15 times forward earnings, and he cites that low multiple as one of the attractive opportunities on the chip side. He frames this as part of a broader set of AI names that the market has over-punished.

  “NVIDIA, is obviously kind of the, you know, the standout stalwart of the group, trading at, you know, under, 15 times earnings on a forward basis.”at 5:57

Generac Holdings

• John Mowrey · NFJ Investment GroupBullish

  Generac, which makes data-centre cooling and backup generators, has pulled back and has a growing pipeline

  Mowrey says Generac is involved in HVAC and cooling systems needed for data centres, as well as backup generators. Those shares have also pulled back significantly. He cites a recent Amazon deal as evidence that the company's pipeline is expanding, which he sees as an opportunity created by the selloff.

  “Companies like Generac that are involved in kind of the HVAC systems and the cooling systems needed for some of these data centers and the backup generators... Amazon did a deal with them recently, which, you know, I think really extends the pipeline for them.”at 5:59

OpenAI

Across the shows: 16 speakers in other episodes, 6 bullish and 14 bearish calls, past 30 days

• Ed Elson · Prof G MediaBearish

  OpenAI, at a $1.5T-plus valuation with no near-term profits, is most exposed if the AI trade sours

  Ed argues the AI bubble sits mostly in private markets. He points to OpenAI and Anthropic seeking very large valuations while being significantly exposed to the downside if the AI trade goes wrong. He says these companies are burning billions of dollars and are not on a near-term path to profitability. Yet they are being treated as if the risks do not exist, unlike public names such as Nvidia.

  “Anthropic OpenAI asking for... valuation. Like, it seems like those companies are significantly exposed to the downsides of the AI trade going wrong more so than a lot of the names that we're that we're talking about”at 7:47

Anthropic

Across the shows: 25 speakers in other episodes, 15 bullish and 35 bearish calls, past 30 days

• Ed Elson · Prof G MediaBearish

  Anthropic will struggle in its IPO; public investors will discount its unprofitable, cash-burning model

  Ed says Anthropic is supposed to go public next month and predicts it will struggle. He argues public-market investors are now discerning and are drawing comparisons to 1999. He says Anthropic is burning billions of dollars, is not profitable, and does not appear to be on a path to profitability soon. He expects those investors to apply difficult multiples, as they have to Nvidia.

  “Anthropic is supposed to go public next month. My prediction is that I think they're gonna struggle a lot because it does seem that public markets investors are actually quite discerning right now”at 9:57

US stock market outlook

• John Mowrey · NFJ Investment Group

  Credit repricing, not AI, is driving market narrowness and punishing small and mid-cap stocks

  Mowrey argues the market has narrowed because credit has been repriced. Rates did not fall as investors expected at the start of the year, partly because of the Fed leadership change. That repricing has hit smaller companies and small and mid-cap firms, which are most exposed to credit. He thinks this is a bigger driver of narrowness than the AI trade or Nvidia propping up the index.

  “one of the things that is driving the narrowness of the market is the repricing of credit... and it's really punished some of the smaller stocks.”at 12:50

• John Mowrey · NFJ Investment Group

  Markets likely substantially higher by year-end; S&P at 18.5x forward earnings with 30% growth is a buy

  Mowrey says he would be surprised if markets are not substantially higher by year end. He notes the S&P 500 trades at about 18.5 times forward earnings with roughly 30% earnings growth. He argues the risk of staying out of the market outweighs the risks on the horizon, because much of the long-run return comes in a few days. He caveats the view: a prolonged Iran conflict would keep pressure on inflation, and an oil-driven escalation is a downside risk. A resolution would bring easier rates and upside.

  “I would be surprised if markets aren't substantially higher by year end.”at 14:51

US Treasuries & yields

• John Mowrey · NFJ Investment Group

  A 10-year Treasury yield above 5% raises borrowing costs for the most debt-financed AI companies

  Mowrey points out that the 10-year Treasury yield is above 5%. He argues this will have a direct effect on the cost of capital for companies most exposed to debt financing. Hyperscalers can largely fund their buildout from their own cash flow, so higher rates hurt them less than leveraged neocloud operators such as CoreWeave.

  “you've got the ten year, you know, over five percent. That's gonna have a direct impact on the cost of capital for the companies that are the most exposed to debt financing.”at 4:40

AI bubble & tech valuations

• John Mowrey · NFJ Investment Group

  The dot-com bust created guardrails that may make the AI buildout more durable than expected

  Mowrey argues the 1999-2000 tech bubble was a gift to today's AI boom because it created guardrails. Investors constantly ask whether this is 1999 or 2000, and circular financing is under scrutiny. He notes AI spending has continued despite restrictive interest rates. He sees that combination of scrutiny and tight money as a setup that could make the buildout more durable than people expect.

  “maybe the tech bubble back in the late nineties and... peaking in March 2000, maybe in the biggest gift that we could have ever given the AI boom today, because I think what that did, Ed, is it created some guardrails.”at 8:25

IPOs, M&A & deal activity

• John Mowrey · NFJ Investment Group

  Investor appetite for big IPOs may be richer than assumed, given SpaceX's large market-cap debut

  Mowrey points to the market cap SpaceX commanded in its IPO relative to its earnings power. He says the market absorbed a very large IPO recently, which suggests investor appetite may be stronger than people assume. He adds that Anthropic will be scrutinised heavily as the first big AI IPO, and that the return-on-capital threshold for AI investment is rising.

  “I think the market appetite might be a little bit richer than maybe we're, you know, all assuming to some degree because it absorbed, you know, a very large IPO recently.”at 11:11

Middle East & Iran

• John Mowrey · NFJ Investment Group

  A prolonged Iran conflict keeps inflation pressure on; resolution would bring oil relief and easier rates

  Mowrey says that if the conflict in Iran drags on, it will keep pressure on inflation numbers, which is a definite concern for markets. He argues Trump faces a political calendar and may escalate or change timetables depending on the midterm outcome. Escalation could push oil higher and is a downside risk. The flip side is that a resolution would bring oil down and allow a somewhat easier interest-rate environment.

  “if the conflict in Iran continues to be drug out, that obviously is gonna keep pressure on the inflation numbers. So you were right. That is a definite concern.”at 14:51

US elections & politics

• Aaron Parnas · The Parnas Perspective

  Democrats will likely win the House by 30 to 35 seats, while the Senate is a near tie

  Parnas argues Democrats are favoured because midterms historically go against the party in the White House, and the economy is underperforming, with voters paying more for groceries and gas. He says the Iran war pushed inflation and gas prices up and swung the Senate map in Democrats' favour. He thinks the House is a lost cause for Republicans. He predicts Democrats will gain about 30 to 35 House seats, giving Hakeem Jeffries a comfortable margin as speaker. He expects a roughly 50-50 Senate with Republicans keeping control.

  “Democrats will probably win about... 30 to 35 seats in the house of representatives to give him a comfortable margin as speaker.”at 28:03