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Keith Lerner: latest market views
Truist Advisory Services
Summary
Keith Lerner is chief investment officer and chief market strategist at Truist Advisory Services, where he leads the Investment Advisory Group and authors Truist's Market Perspective and Market Navigator publications.
Chorus has 13 views from Keith Lerner across 5 episodes on CNBC Closing Bell, CNBC Power Lunch and Bloomberg Surveillance since October 9, 2026.
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Risk-reward for US stocks is improving over six to twelve months after a deep tech valuation reset.
Lerner sees the market in a 'buyer strike' with selling still under way, and he wants stabilization first. He argues that the tech forward P/E has fallen from about 32 a year ago to about 17, a contraction of roughly 45-50%, which he calls the deepest PE contraction this decade and a move from euphoria to fear. He says earnings momentum is still the strongest in the market outside energy, though he acknowledges earnings are at risk. He also notes that since this bull market began, tech has roughly doubled the S&P's returns, with six pullbacks of more than 10% and an average pullback of 17%. Today's roughly 17% drawdown is therefore in line with this bull market's average correction. Because historical rebounds after such corrections have averaged over 40%, and fear can flip to greed quickly, he thinks a little good news could go a long way. He is not calling a bottom, but he believes risk-reward has improved considerably over six to twelve months.
“when you have historic selling pressure, you have valuations that have been reset tremendously ... And I think as you look out six to twelve months, the risk reward has actually improved quite a bit.”at 40:37
CNBC Closing Bell: Closing Bell Overtime: Tech Stocks Plunge Markets Search for A Bottom 11/5/26 ·
Semiconductors are ground zero of the selloff and must turn first before the market finds a floor.
Lerner says semiconductors led the market down and remain its epicenter. He points out that on the previous day, although the tech sector looked strong, semis were down beneath the surface, apart from some hyperscalers. Over the last twenty-five years of cycles, he has looked for signs such as green appearing in unexpected areas, like a semiconductor name, as evidence of relative-value buying. Because the group leads both the decline and any recovery, he says it needs to show leadership on the upside before the market can be considered on firmer ground.
“I do think semis are ground zero. They led the way, down then.”at 41:16
CNBC Closing Bell: Closing Bell Overtime: Tech Stocks Plunge Markets Search for A Bottom 11/5/26 ·
Tech valuations are resetting rather than bubble-like; current P/E sits below where the ChatGPT-era bull market began.
Lerner acknowledges the question of whether this is a bubble and that it requires a judgment call. He compares the current cycle with the late 1990s, when P/E expanded more than 300% over four years before the top. By contrast, the P/E for this bull market is below where the ChatGPT bull market began. His base case is that data center spending will likely slow down, but demand remains there over time, so valuations will reset. He expects the market is pricing in a large earnings reset, and while he expects some slowing, he thinks it will not be as severe as what is priced in. He calls this the next thing to watch.
“the PE for this bull market is actually below where the CHAT GPT bull market began.”at 44:09
CNBC Closing Bell: Closing Bell Overtime: Tech Stocks Plunge Markets Search for A Bottom 11/5/26 ·
Market is rotating, not leaving; broadening supports stocks, and the third presidential year has historically been positive.
Lerner says the market held up despite tech weakness because money is rotating rather than leaving. Last month only tech made a new high, but this month only tech and communication services are down, while the equal-weight index is at its highest since early September and financials, industrials and small caps are rising. He calls this a healthy underlying development. He also notes the S&P 500 has not been down on a total return basis in the third year of a presidential cycle since 1950, which, along with an economy that avoids recession in that year, gives him a reason to be positive into next year.
“So to answer your question is what's keeping this market up is money is rotating as opposed to leaving the market. We think that's actually a healthy underlying development.”at 7:38
CNBC Power Lunch: Alphabet AI Sell-Off, EQT-Range Deal and Big3’s Public Market Plans ·
Elections matter for markets, but other factors matter more; tech has led under every recent administration.
Lerner says the midterm outcome is not zero for markets, but other factors matter more. He looked at the last four administrations and found the stock market had above-average performance under each. Technology was among the top-performing sectors in every administration because that is where the growth is. Energy and financials, which are more exposed to policy, had inconsistent returns. He also says conventional wisdom about how sectors and markets react to elections is often wrong.
“I wanna say it's zero. The way we would frame this, Brian, is elections matter, but other factors matter more.”at 10:17
CNBC Power Lunch: Alphabet AI Sell-Off, EQT-Range Deal and Big3’s Public Market Plans ·
Tech needs a rest; other laggards bounce for weeks, but money eventually returns to tech while the bull market holds.
Lerner says tech is still the primary driver of the market over time but after a roughly 20% gain and a wide outperformance, it is due for a rest. Tech sold off while health care, small caps and the equal-weight index bounced as the rest of the market had been oversold, with financials and industrials down 5-10% last month. He expects that rotation to give other areas a bounce over weeks, maybe a month or two, while the bull market stays intact, and that money eventually rotates back into tech. Falling rates also help the beaten-down areas.
“I think it's a bounce over weeks, maybe a month or two, but I think money eventually will come back to tech in our view.”at 2:38
Bloomberg Surveillance: Bloomberg Surveillance TV: October 16th, 2026 ·
AI infrastructure & data centers
Hyperscalers' growth and rising tech estimates are fine; leveraged marginal AI builders are where problems lie.
Asked about the risk that heavy capex fails to turn into profit and that higher rates hurt tech, Lerner notes forward tech earnings estimates are up 18% over the last three months, with no change in that picture. He expects big hyperscalers still show strong growth in core businesses including cloud, which should reassure investors. The stress he sees is in marginal players that depend on leverage and debt markets, so he would favor companies with big balance sheets over high-leverage ones.
“what it tells me, Jonathan, is the marginal players, the ones that are dependent on leverage and the debt markets, is really where there's more problems”at 5:43
Bloomberg Surveillance: Bloomberg Surveillance TV: October 16th, 2026 ·
Mag Seven likely keep outperforming; tech's 9% premium to the market is among the lowest in a decade.
Lerner still likes the Magnificent Seven and expects them to likely still outperform, with runway left. Even though semiconductors sold off, the Mag Seven made a new high in the last week, which he reads as panic setting in. He points to tech trading at about 20.5 times forward earnings with a premium to the overall market of about 9%, one of the lowest premiums for tech over the last decade. That low premium is his argument that valuations are not stretched and bigger tech players remain the place to stay.
“we're training around the 20.5 multiple right now, and the premium to the overall market is about 9%. That's one of the lowest premiums we've seen for tech over the last decade.”at 7:29
Bloomberg Surveillance: Bloomberg Surveillance TV: October 16th, 2026 ·
Tech and AI remain the bull market's key theme; money should rotate back into mega-cap tech.
Lerner says the mega-cap tech group made a new relative high and is still a better relative value than semiconductors, which rose 80% in Q2 and are now range-bound. Tech has outperformed since the bull market began, and its current weakness reflects catching up with a weak rest of the market. He says money comes back to tech because AI is the key theme.
“ultimately money comes back to tech because the key theme of this bull market still is AI AI and tech in our view.”at 10:50
Bull market has more to go; markets should rebound over the next year unless recession hits.
Lerner tested history and found markets are typically choppy for one to three months after a first rate hike. Over a longer window of about a year, markets tend to rebound as long as there is no recession, which is his base case. He expects the bull market, now four years old, to keep going on a bumpy path.
“As you extend your time horizon over the next year, markets tend to rebound as long as you don't go into recession. That is our call. So all in all, we still think this bull market... has more to go.”at 18:49
The 10-year Treasury at about 5.2% looks like good value; bond-blowup and IMF deficit warnings are contrarian signals.
Lerner notes the 10-year yield hit 5.30% and then fell below 5.20%, which he treats as a positive for bond investors. He reads recent warnings from economists about a bond blow-up and IMF comments on fiscal deficits as contrarian indicators. He sees value in the 10-year at current levels.
“we saw the ten year treasury go up to $5.30 today and come back down to below $5.20. If you're a bond investor, that's a positive... we see value now in the ten year treasury”at 18:49
The bull market still deserves the benefit of the doubt; the AI-led rally should keep grinding higher.
Lerner argues the evidence still favours this bull market. Historically there have been 11 bull markets since 1950, and five of the six that reached four years old continued to gain. Fundamentally, valuations have reset, earnings remain strong, and the primary trend is still up, though he flags some divergences below the surface. His base case is continued economic growth and an intact AI theme, which he sees as the key to the bull market. He says the market should stay tech-led over the next year and that rising rates don't change this much. He notes rates have been near 5.35% and 5.30%, and could move higher, but says that's still manageable given the 1990s, when rates were near 6.5%. He adds that if rates stabilize, the market can keep powering through, though pullbacks won't be a straight line.
“As we look at the way of the evidence, it still suggests we should still give this bull market the benefit of the doubt.”at 44:32
Corporate margins keep improving through repeated shocks, and 2027 earnings estimates are starting to rise.
Lerner says companies have absorbed one shock after another and kept improving margins, with forward estimates continuing to move higher. He points to 2027 estimates as the signal to watch. They are now in focus and are moving up instead of following the usual pattern of downward revisions. He takes this as support for the view that the bull market is intact and that pullbacks will be shallow rather than a straight-line decline.
“Over and over again, our companies have gone through one shock after another, and they have continued to improve as far as margins, and we continue to see forward estimates move higher. ...we're starting to see those estimates move up instead of the normal move, which is typically down.”at 46:12
Shows
- CNBC Closing Bell · 3 episodes
- CNBC Power Lunch · 1 episode
- Bloomberg Surveillance · 1 episode
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