Episode summary
The Investment Committee debates whether the AI trade is in trouble
CNBC Halftime Report
· · 9 min · Hosts: CNBC Halftime Report
Summary
The panel opened by framing the selloff in tech as a test of whether the AI trade is merely oversold or genuinely damaged. Deutsche Bank’s upgrade back to overweight on tech was discussed as evidence that positioning has reset after a sharp October drawdown, with the Nasdaq near a three-month low and several chip names down more than 25% for the month. The host and panelists agreed that price action has weakened, but they split on whether that alone makes the trade attractive again.
Steve Weiss argued that something fundamental has changed: the era when AI-related companies could raise money at any valuation they wanted is ending. He pointed to OpenAI pulling back on financing, investors becoming more selective, and the risk that rising capital needs will pressure valuations across the ecosystem. The panel also cited Melius’s Ben Reitzes, who said AI trades are facing their toughest moment because funding and capex are now the main issue.
Other panelists pushed back that the biggest hyperscalers still have access to capital and are not backing off capex. They highlighted Alphabet, Amazon, Microsoft and Oracle as evidence that spending plans remain intact, even if pricing is more difficult. The group also said cleaner positioning and heavy de-risking in October could set up a rebound if earnings and momentum improve, but they do not yet see an all-clear signal.
Key takeaways
- Steve Weiss said the AI trade is “definitely on pause” because the private-market funding backdrop has tightened.
- The panel said October brought major de-risking, with tech seeing its largest net sell month in more than five years, which has left positioning cleaner.
- One view was that the key change is financing: AI companies can no longer raise capital “whenever they wanted” at any valuation.
- Another view was that capex remains intact at Alphabet, Amazon, Microsoft and Oracle, so the largest spenders still have access to the market.
- The panel said an Anthropic IPO could be an important tell for whether investor demand still supports the AI buildout.
Notable quotes
“I THINK IT'S ON ITS HEELS FOR SURE. WE SAW THAT AT THE END OF LAST WEEK”
“WITHOUT A DOUBT. WITHOUT A DOUBT. THERE USED TO BE ABLE TO RAISE MONEY WHENEVER THEY WANTED WHATEVER THEY WANTED AT ANY VALUATION THEY WANTED”
“SO I THINK THE AI TRADE IS IS DEFINITELY ON PAUSE. AND THIS IS A VERY TYPICAL AT THE PEAK OF A CYCLE”
“FUNDING CAPEX IS EVERYTHING. AND HE'S CUT PRICE TARGETS ON A NUMBER OF NAMES NVIDIA MARVELL, AMD DELL BROADCOM”
“THE CAPEX PLANS ARE STILL VERY MUCH INTACT”
How the episode opens
Hour. New month same questions. What is the state of the tech trade after the worst month in a year and a half.
We will trade the biggest movers today. Of course, we'll get to set up for apple and palantir earnings tonight as well. Joining me for the hour, joe terranova, steve weiss, jim lebenthal and brant torkington.
So we do begin with green on the screen. Nasdaq around a three month low. And it is the question, I think, on everyone's mind whether the ai trade is in trouble or not, whether something fundamentally has changed and the fundamentals have gotten worse.
Let's make that the backdrop for deutsche bank making a big call today. The spring is coiled again. They upgrade tech to overweight.
Three weeks ago we downgraded tech tactically from overweight to neutral as the risk reward seemed unfavorable. With performance, positioning and the perception of growth all asymmetric. Well, tech underperformed sharply since then, taking it to the bottom of its decade long relative trend channel and investor positioning in tech has also dropped sharply, in line with a significant deceleration in earnings growth risk reward now in favor of tech again.
And we upgrade it back to overweight. So that's where we're starting with a new month. What do you think.
I think it's on its heels for sure. We saw that at the end of last week. I don't think you have any confirmation today that you have an all clear signal. Just because you have a bounce in the market. Let's be clear. Today is about the price of oil being 7% lower, yields falling further to levels we haven't seen in the last 45 days.
You disagree with. — This call. And therefore it's a cyclical consumer discretionary trade.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai trade
- stock market outlook
- investment committee debate
- early month positioning
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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