Can the Stock Market Survive a Tech Meltdown?

MSCI

Across the shows: 2 speakers in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Matt Cerminaro · Ritholtz Wealth ManagementBullish

  MSCI is an AI winner as an LLM data supplier; could hit $1,000 on a breakout above $700.

  Matt picks MSCI as an AI winner because it sits at the forefront of supplying the data that LLMs use. The stock has gone nowhere since 2021-2022, creating a long base. Fundamentals look strong: revenue has tripled since 2015, operating margin has stair-stepped higher to 56% over the trailing twelve months, and Q3 is already reported. Technically he sees an ascending wedge from the 2022 low; a breakout above about $700 could take it toward $1,000 quickly. He would sell if the stock were rejected by that trend line, and he would not set a traditional stop.

  “if it breaks out, I think, above... Let's just use 700. This thing could go to, like, a thousand dollars really quick.”at 51:11

• Michael Batnick · Ritholtz Wealth ManagementBullish

  AI-disruption fears for data providers like MSCI are overdone; expect partnerships, not lawsuits.

  Michael argues the narrative that AI will disrupt data providers like MSCI, FactSet and the rating agencies is debunked. Investors sold these names as if an AI model could simply build a compliant index that replicates decades of S&P work, and as if the agencies were not government-regulated entities. He expects partnerships rather than these companies being sued into obsolescence. He also says the stock looks very good, though he is unsure where a stop would sit.

  “That narrative is obviously debunked. You know, price did it, but investors came to their senses.”at 52:40

NVIDIA

Across the shows: 98 speakers in other episodes, 78 bullish and 51 bearish calls, past 30 days

• Matt Cerminaro · Ritholtz Wealth ManagementBullish

  Nvidia's rally is backed by earnings: forward estimates have grown about thirty-fold versus a roughly nine-fold stock gain since ChatGPT.

  Matt compares Nvidia's forward earnings estimates with its stock price since ChatGPT's launch. Forward earnings are up about 3,246%, roughly 30x, while the stock is up about 944%, roughly 9x, so earnings growth is running well ahead of the price. He backs the estimates' reliability by checking his own spreadsheet: trailing twelve-month actual earnings have come in above the estimates made a year earlier in almost every quarter since 2024. He hedges that he has no foresight on whether the lines converge over the next twelve months, but the track record is what he cites in support of the earnings story.

  “So the forward earnings are up 3246%, so they're up 30 x since the ChatGPT launch. And then the stock price is up nine x.”at 26:05

US stock market outlook

• Matt Cerminaro · Ritholtz Wealth Management

  Sector rotation is under way: six S&P sectors sit within 3% of all-time highs, which he finds encouraging.

  After the two-day tech blowup, Matt notes that health care, materials and staples are near their highs, and that the negativity is concentrated in tech, especially semis. Six S&P 500 sectors are within 3% of all-time highs. He contrasts this with past sell-offs, where almost everything got crushed. He says there is 'some rotation going on under the surface, which I like to see.' Michael supports this with the Ned Davis data: insurance, pharma, staples and commercial services gained during the semi-led drawdown.

  “there's six sectors within 3% of an all time high. So there is some rotation going on under the surface, which, you know, I think I I like to see.”at 10:17

• Matt Cerminaro · Ritholtz Wealth Management

  Value-over-growth breadth thrust may be meaningful, but a durable value rally would be hard to square with the AI trade.

  Matt says the value-versus-growth ratio is breadth-thrusting, and 'there's something there.' Michael notes the ratio is at a three-year high, roughly flat since mid-2020, and that value just had its widest six-day outperformance versus growth since 2000. Matt hedges, saying Josh usually calls these moves a fake-out, and he has not seen enough years to know whether this is 'the one.' He does argue that a sustained rise in value over growth is hard to reconcile with the AI trade continuing, since both are unlikely to be true at the same time. His overall position is uncertain.

  “We're breath thrusting in the value versus growth ratio. There's something there.”at 29:30

• Matt Cerminaro · Ritholtz Wealth Management

  Nasdaq 100 historically catches up to equal-weight S&P after its new high, with about 21% gains over a year.

  Matt's historical study: when the S&P 500 equal-weight index makes a new high while the Nasdaq 100 is about 10% off its high, the Nasdaq typically catches up rather than the equal weight falling back. Excluding the tech bubble, the Nasdaq 100 averaged about +8.1% three months after such signals and about +21.6% over twelve months. He therefore expects the playbook to produce roughly a 21% gain from that Wednesday over the following year, though the tech bubble skews the full sample.

  “typically, what happens when the equal weight is leading... The Nasdaq historically catches up to the equal weight and subsequently makes a new all time high, and the forward returns are actually very strong.”at 44:27

• Michael Batnick · Ritholtz Wealth Management

  Nasdaq should regain new highs in about 113 trading days, roughly five months from now.

  Using the same catch-up study Matt presented, Michael cites the average number of trading days, excluding the tech bubble, for the Nasdaq to return to new highs after the equal-weight index made one: 113 days. He asks Matt to put that date on the calendar and revisit it around spring, treating it as a checkable timeline.

  “For the Nasdaq to get back to new highs, x the tech bubble, is a hundred thirteen days.”at 45:00

• Michael Batnick · Ritholtz Wealth Management

  AI-driven top-heavy concentration makes macro data like CPI less useful for predicting index moves.

  In 2026 the index is so top-heavy and AI-driven that the old rule of market reaction to hot or cold data no longer works. Michael points to Nvidia falling about 6% on the day as the reason the index moved, with nothing to do with the CPI report. The equal-weight index was up about 20 basis points, showing the concentration effect.

  “2026 has broken a lot of this stuff because the market is so top heavy and it's so AI hot or cold.”at 49:30

AI infrastructure & data centers

• Michael Batnick · Ritholtz Wealth Management

  Election-driven fears of a slower AI build-out sold tech hard, and the rebound made sense as a healthier, slower pace.

  Michael argues last week's selloff followed the market's realisation that a Blue wave would slow the AI build-out, so futures sold off hard and the Nasdaq 100 fell about 3% at its lows. Overnight the futures turned green as the narrative shifted to worries about hyperscaler spending, free cash flow turning negative, equity issuance, circular financing and debt-market access. He says demand is not slowing, so cutting back from a '150 mile an hour gas pedal' to a slower pace over a longer period is good for the market. He thinks the sell-off and the recovery both made sense. The view is about the mechanism of the market's reaction, not a forecast of the buildout itself.

  “Because the demand side is not slowing down. So if we have an opportunity to maybe take our foot off of a 150 mile an hour gas pedal, and we can prolong this over a... longer period of time, then that would be good for the market”at 5:21

Earnings & corporate profits

• Matt Cerminaro · Ritholtz Wealth Management

  Earnings growth is broadening: the other 493 S&P companies are now expected to outpace the Magnificent 7 this quarter.

  Matt charts year-over-year earnings growth. The other 493 S&P 500 companies are expected to grow earnings 32.6% this quarter, versus 22.6% for the Magnificent 7. It is the first quarter in the past four where the 493 are expected to outpace the Mag 7. He also charts forward EPS for the 493 relative to the Mag 7, which bottomed on August 31 and is up about 6.5% since. The relative price ratio is up 7.3% since its October low, which he reads as the 493 outperforming because their estimates are being revised higher faster. He credits part of the gain to energy and to cost cutting at AI-build-out beneficiaries flowing into their earnings. Michael questions the size of the 32.6% figure, and Matt concedes he hasn't broken it down.

  “32.6% year over year earnings growth expected for the four ninety three this quarter, and then the mag seven are expected to grow earnings by 22.6%.”at 15:03

Big Tech platforms & digital ads

• Matt Cerminaro · Ritholtz Wealth Management

  Mag 7 stocks falling after earnings beats is a yellow flag, a bearish sign for these megacaps.

  Matt tracks the average one-day move of Magnificent 7 stocks after they beat. Historically, since Q1 2018, they usually rally after beats. This quarter, four of six have beaten so far and on average fallen about 3% the next day. He treats that as the main thing that would make him cautious about the Mag 7: blowout earnings followed by falling stock prices. He says the beats are not small and still crush high estimates, which makes the reaction more concerning. Michael agrees the pattern is a bearish 'feather in the cap' and a 'yellow light', though he offers a charitable reading in which the wall of worry is growing.

  “four of six have beat so far, and on average, they've fallen 3% the next day.”at 19:17

AI bubble & tech valuations

• Michael Batnick · Ritholtz Wealth Management

  Today's tech selloff shouldn't mirror the dot-com bust; other market areas should work absent a deep recession.

  Michael's historical charts show that during the dot-com bust tech and communication services fell about 70% from the March 2000 peak while the rest of the market rose about 3%. Nearly every sector had broad participation, and the bust was a stock-market recession, not an economic catastrophe. He says that if today follows the dot-com pattern, plenty of other areas should work, unless a massive global recession occurs, which he doesn't expect.

  “if today follows the .com bubble... And then, of course, it won't. Of course, it won't. But there should be plenty of other areas of the market that work unless we experience like a massive global recession.”at 41:51

US inflation

• Matt Cerminaro · Ritholtz Wealth Management

  Market reaction to CPI is a better guide than the data itself; stocks rising on hot CPI tend to gain.

  Matt, following a lesson from Tom Lee, argues the real signal in economic releases is the market's reaction. He tested cases where CPI came in hot, above the Bloomberg median, but stocks still rose on the day. In those cases the S&P 500's average forward three-month return was about 6.3%, which suggests the market was looking past the print. Cold CPI with stocks falling, the opposite case, saw the S&P average around +5.5% over three months. He concludes that following the market's cue is more productive than dissecting the components of the report.

  “I think it's just, like, taking your cue from what the market is telling you is just gonna be more productive when trying to figure out what's gonna happen.”at 49:10

US growth & recession risk

• Michael Batnick · Ritholtz Wealth Management

  Weakness in retail and discretionary stocks does not signal an imminent economic rollover.

  Michael notes that XRT and equal-weight discretionary have been trending down relative to the S&P 500 for years, so their recent breakdown reflects a long-running trend rather than a new economic signal. When people claim retail stocks are crashing and the economy is about to roll over, he says that has nothing to do with anything. The recent move in the purple-line chart he showed rebounded, underscoring that the breakdown did not forecast a downturn.

  “So when people say like, uh-oh, retail consumer stocks are crashing, like, the economy's about to roll over. No, dumbass. It has nothing to do with anything.”at 56:07