Episode summary
Tech names are driving the market, but they don't go up forever: Kari Firestone
Summary
Kari Firestone argues that the selloff in tech and semiconductors looks more like a normal correction after a powerful run than the start of a bear market. She points to the S&P 500’s roughly 20% gain since the end of March and the huge gains in names like Google, Meta, Microsoft, Apple, and Nvidia as evidence that the market had become “priced for perfection.” In her view, the recent 5% to 10% pullback in some stocks is what happens when the biggest market leaders become stretched.
Key takeaways
- Kari Firestone says the current move is likely a 5% to 10% correction, not a bear market, because broad market damage is not happening at the same time.
- She says the AI trade is still the biggest cycle ever, with trillions of dollars of market value and spending moving the indexes.
- Firestone sees the highest risk in highly levered AI-buildout names, citing companies with eight times to ten times leverage versus cash-rich megacaps like Alphabet, Microsoft and Apple.
- She argues today’s leaders are unlike the dot-com era because they have revenue, profits and free cash flow, making a 1999-style collapse less likely.
Notable quotes
“THE TECH NAMES ARE DRIVING THE MARKET. BUT THEY DON'T GO UP FOREVER BECAUSE THEY'RE PRICED SO HIGH”
“WE MAY BE HAVING A 5 TO 10% CORRECTION, BUT A BEAR MARKET IS 20%”
“THIS IS THE BIGGEST CYCLE WE'VE EVER HAD”
“WE WOULDN'T BE SEEING THAT TYPE OF SCENARIO”
How the episode opens
Nasd
Nasdaq futures in the red this morning as fears of overspending and debt loads held by ai companies start spooking investors. A little bit you're looking at the futures for the nasdaq this morning down another 1% after the declines that we saw yesterday. Those declines were much more concentrated.
When you start looking at things like the semiconductor index semiconductors down 4.5% yesterday on the sox index, but down substantially more, down more than 9.5% over the last five trading sessions. That sector alone has lost about $1.6 trillion over the last six trading sessions. So we'll watch that very closely.
Joining us right now to try and figure out how to interpret everything that's happening right now is Kari Firestone. She's the co-founder and chair emerita of arias asset management. She's also a cnbc contributor.
And carrie, walk us through how you're feeling this morning, what you're checking out.
Yeah. Hi, becky. Thanks for having me.
I think that we had such a strong rally from the end of march. That was when the market had fallen 5% because of fears about war and higher oil prices and inflation. The s&p was up about 20% since the end of march.
Most of the hyperscalers, if you looked at google, meta, microsoft, apple, nvidia were up in the 29 to 40 plus percent for that period of time. That's a lot of gains, lots of trillions of dollars in in just those companies. And that's not the rest of the chips.
The sox was up incredibly, some of those names up 100 plus percent. So we're priced for perfection. We were priced.
For we. — Were due for a pullback. — I think so. And so the stock's come back 5 to 10%. Some of them more.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tech stocks
- ai trade
- market trends
- valuation
- market momentum
Watch the episode
Watch “Tech names are driving the market, but they don't go up forever: Kari Firestone” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from CNBC Squawk Box
-
Rep. John Moolenaar on investigating Nvidia's Jensen Huang: CCP influence raises multiple concerns -
Jensen Huang's affair has gone from a personal scandal to a corporate governance issue: Paul Argenti -
Experts react to the October CPI report -
Fairlead's Katie Stockton on market selloff: Don't sell weakness, sell the strength -
Ron Baron on his Musk investments: Can make 'hundreds of billions of dollars' over the next 10 years -
Tech selloff looks like a normal correction, says JPMorgan's Jack Caffrey
CNBC Squawk Box, this episode and its artwork belong to their owners. Octagon is not affiliated with the show; this page is an independent summary.
