Did The Market Just Break? | Lance Roberts

Alphabet

Across the shows: 45 speakers in other episodes, 34 bullish and 25 bearish calls, past 30 days

• Lance Roberts · RIA AdvisorsBullish

  Google's post-earnings selloff is an overreaction; the stock is oversold and a buying opportunity.

  Google's earnings were very good and only slightly light versus expectations, yet the stock fell about 12%. Lance called this an overreaction amplified by margin and leverage use and options hedging. He said Google was more than four standard deviations oversold, and historically a large-cap stock reaching that level has tended to be a contrarian buy signal rather than a sell signal. He warned that selling after the drop often traps investors, who then buy back after a bounce and buy again just before a retest of the low. He cited a forward valuation of roughly 18x earnings with a PEG near 1, which he argued is not rich.

  “their earnings were very good. It came in a little bit light on earnings, but nothing to warrant a 12% decline in the stock. So there's just this overreaction that's happening to these stocks.”at 5:32

• Lance Roberts · RIA AdvisorsBullish

  AI won't break Google's ad business; it will monetize AI through Gemini ads and diversified revenue streams.

  Lance acknowledged the latest report suggests AI is eating into Google's ad revenue, but argued Google is a very strong marketer and will likely insert ads into Gemini responses, so AI becomes another ad surface. He pointed to the latest quarter's revenue lines: search about $243B, Cloud $77B, subscriptions $51B, YouTube ads $42B and Google Network $30B, so search is roughly half of revenue. He said Google is not a one-trick pony and is effectively a monopoly in search and video, with YouTube hard for rivals like Twitch and Kick to displace. He added that Google has historically been very good at turning allocated capital into revenue, so even if AI disappoints, search ads alone generate a very large amount of profit. Adam Taggart pushed back that Google's dominance in search does not carry over to AI, where many competitors can copy quickly.

  “But one thing I know about Google is they are brilliant marketers when it comes to ad revenue. So they may see this impact into their ad revenue from AI. And then the next thing you're going to see is that every time you pull up AI through Gemini, there's an ad attached to it.”at 23:41

Micron Technology

Across the shows: 15 speakers in other episodes, 11 bullish and 7 bearish calls, past 30 days

• Lance Roberts · RIA AdvisorsBullish

  Micron is extremely cheap and is the largest holding in the value index.

  Lance argued that valuations must be judged company by company, using Micron as an example of a cheap stock. He called Micron extremely cheap and noted it is the largest holding in the value index. He contrasted it with high-multiple names like Costco and Walmart. The support given is mostly valuation and index weight rather than detailed fundamentals.

  “Micron is extremely cheap. Micron is an example. That's the largest holding in the value index.”at 12:38

Vanguard Mega Cap Growth ETF

• Lance Roberts · RIA AdvisorsBullish

  Mega-cap growth ETF is oversold and likely to rotate back up as value leadership fades.

  MGK, the mega-cap ETF, has traded flat since June within a wide range, and it has taken damage over the last couple of weeks. Equal-weight RSP has performed much better. It oversold two standard deviations, triggered a buy signal, and its relative strength improved from low levels. MGK and RSP show almost an inverse correlation, which Roberts reads as a rotation that began in early October from growth into value. The mega caps are now decently oversold on both momentum and relative strength and are two standard deviations below their moving average. Roberts sees a reasonable expectation that money moves back into growth stocks because of the current dispersion of returns. He expects this within the next week or two, noting his analysis is only reliable over two to four weeks. Once the rotation from value back to growth occurs, he expects a large rebalancing of his models.

  “So there's a reasonable expectation that we may see a move back into these values of these growth stocks potentially from value because of that dispersion of returns that's currently going on.”at 1:14:17

US stock market outlook

• Lance Roberts · RIA Advisors

  If the index breaks out of its range, expect a retest of the 200-day moving average near 7,300.

  Lance noted Bollinger Bands have become very narrow after a consolidation range. If the market breaks down out of that range, the bands should expand, leading to a retest of the 200-day moving average. He placed that level around 7,300, while hedging with 'ish'. He framed the breakdown as conditional and important to watch.

  “If we break down out of this consolidation range, that's gonna be very important... we're gonna get a retest of the two hundred day moving average. That's around 7,300 ish right now.”at 1:00

• Lance Roberts · RIA Advisors

  The selloff is concentrated in megacap tech; breadth in the equal-weight index has held up.

  Lance said the number of stocks above their 20-day and 50-day moving averages is holding up well, and the equal-weight index has not suffered much damage. He said the damage is primarily isolated to a few large names like Google, Amazon, Meta and Intel. He noted that value stocks were up while growth stocks were down over the week, showing dispersion rather than a broad market breakdown. He argued this points to isolated damage rather than a systemic decline.

  “There's not been a tremendous amount of damage in the equal weighted index. It's primarily just isolated at this point.”at 5:00

• Lance Roberts · RIA Advisors

  Growth-over-value rotation may come soon, since value is overbought and growth oversold.

  Lance's rotation model flipped from growth to value on October 5. He said the model is very close to flipping back from value to growth, possibly as early as next week, because value is now extremely overbought and growth extremely oversold. He cautioned that the timing depends on the model's internal parameters and is not guaranteed. He expects rotations like this to happen very rapidly, and that markets may surprise people by rotating back into growth despite the week's headlines.

  “We're very close to flipping that model back to go from value to growth because value is extremely overbought now. Growth is extremely oversold.”at 7:25

• Lance Roberts · RIA Advisors

  A year-end tailwind from buybacks, liquidity and seasonality suggests higher US stock prices over two months.

  Lance argued the market is getting decently oversold, with tech stocks beaten up in a sector that is a large part of the index. He expects buybacks to return across the board after the election, since the election outcome will be known and uncertainty removed. He cited plenty of liquidity heading into year end and portfolio rebalancing as managers need to own the right companies by year end, which he linked to the typical Santa Claus rally. He also noted earnings have been strong and economic growth around 2.8% to 3.2% is supportive. Together these form a tailwind he expects to dominate the next two months.

  “So the tailwind over the next two months suggests higher prices.”at 18:37

• Lance Roberts · RIA Advisors

  Equity allocation may rise from 60% to 65-67% into year end if technicals line up.

  Lance outlined the game plan for his firm's models. If the expected growth-over-value rotation occurs, they will trim value holdings back to target weight, add back technology exposure, and raise overall equity exposure from 60% to about 65% or 67% into year end. He tied this to the year-end tailwind of buybacks, liquidity and seasonality, and conditional on technicals lining up. He noted nothing is guaranteed.

  “probably increase the overall exposure to equities in the portfolio from 60% to probably 65% or 67% going into year end, providing all the technicals line up accordingly.”at 18:53

• Lance Roberts · RIA Advisors

  Hot sectors usually reverse, so chasing last year's leader sets investors up to lose.

  Roberts and Taggart discuss an annual Callan chart ranking market sectors. Last year's best performer is often next year's worst, as herd money piles into a hot sector and then gets washed out. Roberts cites emerging markets, which were hot in 2007 and the worst performer in 2008, then hot again and worst the next year. He concludes that sentiment gets offside and overbought assets correct, so the contrarian move is to look for where money rotates next.

  “everybody's really, really excited about something, and then we start looking for the where's that trade go to next, because it's eventually gonna rotate somewhere else.”at 59:01

• Lance Roberts · RIA Advisors

  S&P has gone nowhere since June; a breakdown from this consolidation range would matter.

  Roberts shows the S&P 500 with Bollinger bands. Two and three standard deviations from the 50-day average have tended to mark tops or bottoms. Earlier this year, during the Iran crisis selloff, the market hit three standard deviations oversold, then bounced sharply. Since June the market has been flat for five or six months despite AI turmoil, and the cap-weighted index is trading right on its 100-day moving average today. Bollinger bands are very narrow, so a breakdown from this trading range would be important.

  “We've gone literally nowhere since June. This market has been flat now for what, five, six months together... We're trading right on this one hundred day moving average at the moment.”at 1:10:08

• Lance Roberts · RIA Advisors

  S&P 500 could retest about 7,300 if support breaks, or rally to about 8,100 by year-end if it holds.

  Roberts reads the index technically. Bollinger Bands have narrowed, so a breakdown from the current trading range should widen them and trigger a retest of the 200-day moving average near 7,300. The index is not yet oversold, though momentum has become decently oversold after the last couple of months of working off an overbought condition. He says internal damage is being done even though the headline market is technically okay. Next week's key test is whether the market defends the 100-day moving average. If it does and then breaks out above about 76.30 (index level as he quoted it), he expects a year-end rally toward roughly 8,100 by late December, a 'Santa Claus rally'. If support fails, he expects a deeper correction back to the 200-day near 7,300. He also says markets can correct either through a sell-off or through sideways consolidation.

  “If we do defend that level and then can eventually break out to the upside... then that sets us up for the rally in the year end, which should get us around 8,000 [8,100] by the end of December.”at 1:12:06

Earnings & corporate profits

• Lance Roberts · RIA Advisors

  Earnings expectations ran too high, so solid results are being punished; 2027 estimates still rising.

  Lance said that normally expectations are cut into an earnings season and companies then beat them routinely. This quarter analysts ratcheted expectations higher and higher going into reports, so companies still posting strong earnings growth can disappoint the Street. He added that earnings expectations for 2027 are still being revised higher despite this week's reports. The sell-off is therefore about the gap between high expectations and results, not weakening fundamentals.

  “We were ratcheting up these expectations higher and higher and higher going into earnings. And I've showed you these charts before. It's just expectations are out to the moon.”at 13:20

• Lance Roberts · RIA Advisors

  Earnings are broadly strong, with a record share of companies guiding higher.

  Lance said earnings overall have been very good, not just in tech. As of Monday, 72% of companies were guiding earnings higher, which he called an all-time record. He argued this reflects the whole market rather than the tech sector alone. He used this breadth to argue that the earnings backdrop remains supportive despite the weakness in large tech names.

  “as of Monday, 72% of companies were guiding higher. That was an all time record. So you're not talking about the tech sector, you're talking about The the entire entire market, right?”at 16:38

Market sentiment, positioning & volatility

• Lance Roberts · RIA Advisors

  Record margin debt and zero-day options are amplifying market moves and causing exaggerated selloffs.

  Lance argued the recent declines were exacerbated by excessive use of margin and leverage that has built up in markets over the last couple of years. He cited margin debt at a record level, roughly $1.2 trillion, while acknowledging he had not checked the latest figure. He also pointed to heavy zero-days-to-expiration options trading, which creates off-sides hedging that intensifies moves in both directions. He used these mechanics to explain why stock reactions looked disproportionate to the news.

  “margin debt's at a record $1,200,000,000,000 right now. Don't quote me on the number exactly. It's up there somewhere. I haven't checked it lately.”at 13:42

• Lance Roberts · RIA Advisors

  AI trading will chase momentum, raising volatility and favoring skilled stock pickers.

  Roberts argues that if AI runs trading across markets, it will replicate what everyone else is doing because it works from trailing data. Prices will then trade in one direction. As asset prices rise, AI will chase momentum up, and as they fall it will chase momentum down, making volatility swings much bigger. He sees the resulting dispersion and mispricings as an opening for good stock pickers and hedging structures. He cites young investors who go it alone with AI and get poor results as an example of the same dynamic.

  “So we've got market volatility that's going probably become a lot higher because as asset prices are rising, AI will start to just basically chase momentum.”at 46:24

AI & jobs

• Lance Roberts · RIA Advisors

  AI will erode the internship and research-assistant pipeline that builds skilled talent.

  Roberts says research assistant roles are a big deal for learning, but researchers now say they no longer need assistants because AI will do the work. He argues the effect will not be just job loss but the loss of skilled talent people normally learn through internships. Taggart agrees, saying he has talked about eroding the lower rungs of the ladder.

  “So my point is it's not going to be just job loss. It's going to be the loss of skilled talent that people learn through internships and all those because internships start to go away.”at 39:01

• Lance Roberts · RIA Advisors

  AI cuts portfolio-model build time from months to about a week at his firm.

  Roberts gives a concrete example. Building a new portfolio model and running its backtests for a large family office normally takes two to three months. Using AI, he built the model in about a week and was nearly done with backtests after another week. He also says AI helps him write research articles, cutting hours of sourcing to an hour or two and improving the work through debate.

  “normally that process would take me two or three months to build it... But because of AI, I can now, I've built the model in about a week and I've been running backtests now for about a week.”at 48:54

US growth & recession risk

• Lance Roberts · RIA Advisors

  Q3 GDP growth came from AI-related imports and capex, while consumer spending was flat.

  Lance said the first-quarter-three GDP estimate of 3.2% came with consumption, roughly 70% of GDP, unchanged from the previous quarter. The growth instead came from a big surge in imports for AI and semiconductors, plus business investment in AI capex. He noted the first estimate is an average of Wall Street economists and usually gets revised lower over the next two months. He still considered even 2.8% to 3% growth decent and supportive for earnings.

  “consumers didn't spend more or less, they spend exactly the same. But the growth came from a big surge in imports because we're importing all this stuff for AI, semiconductors”at 17:07

AI bubble & tech valuations

• Lance Roberts · RIA Advisors

  AI selloffs like DeepSeek's have repeatedly reversed; narrative-driven fears have proven short-lived.

  Lance pointed to recent history: when [DeepSeek] came out, the market sold off on the claim that AI was ending, then AI rebounded sharply. Two summers ago, valuation and AI-spending concerns drove a roughly 10% tech selloff, which also reversed. He argued that people assign macro narratives to every correction, which causes them to forget the fundamentals of the companies involved. The implication is that AI and tech selloffs driven by narrative tend to recover.

  “when [DeepSeek] came out, was like, oh, this is the end of AI and the market sold off, AI sold off. And then all of a sudden out of the blue, comes roaring back.”at 22:16

Education

• Lance Roberts · RIA Advisors

  AI use is hurting students' learning, citing an MIT study, and may end homework and grading.

  Roberts cites an MIT study of AI use by students and professors. The study found the impact of AI on students is negative because they are not learning the material; they assign AI the homework and bring back results. He notes reports that teachers and professors are stopping homework because it is all AI-generated, and raises the concern that grading may stop altogether.

  “the impact of AI on students is negative because they're not learning the material. They just simply go and play... They put it in the AI, they bring back the test.”at 37:58

Cybersecurity

• Lance Roberts · RIA Advisors

  AI will make hacks more problematic, so investors should hold a cybersecurity position.

  Roberts points to the security risk in crypto, citing thousands of individual crypto hacks, protocol exploits and wallet compromises over the past five years. He cites TRM Labs' count of roughly 150 major hacks and exploits in 2025 alone. Taggart suggests AI makes hackers smarter, and Roberts agrees that AI will make these hacks more problematic over time. He therefore recommends that one holding be cybersecurity or a company involved in it.

  “that's why I think one of your holdings has to be cybersecurity and some company involved with cybersecurity. Because, again, AI is just going to make these hacks even more problematic in the future.”at 53:45

Gold & precious metals

• Lance Roberts · RIA Advisors

  Gold's 2025 vertical spike is now correcting, as usually happens after hot sector runs.

  Roberts says gold was the hot sector in 2025 and everyone piled in. His firm warned in December that big vertical price spikes are typically followed by corrections. This year gold has been correcting that spike. He also says real rates are weighing on gold and silver, which has disrupted the diversifying role they played last year.

  “in 2025, gold was the hot sector of the market. Everybody was chasing it... when you get these big vertical spikes in asset prices, that's typically when you get the correction. And so this year it's been correcting that vertical price spike.”at 55:11

US Treasuries & yields

• Lance Roberts · RIA Advisors

  Bonds are overbought near 4.95% 10-year resistance; expects yields to rise temporarily.

  Roberts' firm bought shorter-duration bonds after tax-loss selling longer-duration ones, then cut the position from 5% to 4% this week as bonds became technically overbought after yields fell sharply. He says the 10-year Treasury, at about 4.95%, is approaching a resistance zone and bonds are still pricey, so he would be careful chasing them. Upcoming inflation and other reports could push rates up temporarily, so he would wait for a better entry point to add duration. He still agrees with Taggart that bonds should return to their diversifier role in the years ahead, since they lack volatility and cycle in and out of favor.

  “bonds are still pretty overpriced here. Yields today are about 4.95 on the ten year treasury. And we're kind of getting up into that resistance zone. So, would be careful chasing bonds here.”at 1:01:31