Episode summary
The AI Trade Is Cracking | Peter Boockvar on What to Own Instead
Excess Returns
· · 1 hr 2 min · Hosts: Matt Zeigler · Guests: Peter Boockvar
Summary
Peter Boockvar argued that the AI trade is starting to crack because markets are shifting from rewarding growth to pricing in peak capex. He said investors are finally worrying about whether the huge buildout behind data centers, semis and cloud services can earn an adequate return once growth slows, and he compared the setup to past cyclical peaks where stocks look cheapest near the top of earnings power.
He broke the AI economy into the physical construction phase, the server and chip supply chain, and the model makers and hyperscalers that lease computing power. In his view, a slowdown in new data center construction would ripple through everyone selling into those projects, from steel and electrical gear to labor. He was especially skeptical of CoreWeave’s model, citing its long lease obligations, heavy borrowing and rising cost of capital, while saying companies like Nebius have better balance sheets.
Beyond AI, Boockvar said the Fed is likely in a tweaking cycle rather than a full hiking cycle, and that the central bank may hesitate if the AI buildout weakens growth. He was constructive on defensive areas like consumer staples and healthcare, bullish on gold as real rates and the dollar roll over, cautious on private credit, and still interested in overseas stocks because many non-U.S. markets have cheaper valuations and higher dividend yields.
Key takeaways
- Boockvar thinks investors are beginning to price in peak capex, which could pressure AI-linked stocks before the spending peak actually arrives.
- He said CoreWeave’s lease-heavy model and high financing costs make its return on capital a major question if GPU prices fall.
- He expects the Fed to stay cautious because the AI buildout has been a meaningful support to growth and inflation.
- He sees consumer staples and healthcare as troughing sectors that could benefit if the AI trade and broader growth slow.
- He remains constructive on gold because central-bank buying, weaker real rates and a softer dollar are lining up in its favor.
- He likes international stocks for cheaper valuations, higher dividend yields and less direct exposure to the AI trade.
Notable quotes
“The thing that investors have to understand is that stocks price in rate of change”
“Investors are now beginning to price in peak capex”
“The interesting thing about international markets is a lot of stocks overseas are non AI plays”
“if this trade continues to roll over if Anthropic for example either doesn't go public because there's not enough investor demand”
“I think that those stocks are bottoming”
How the episode opens
The thing that investors have to understand is that stocks price in rate of change. Investors are now beginning to price in peak capex. The amount of times that I heard over the last 3 months how cheap Micron was because it was trading at six times earnings.
My head wanted to explode. That one stock is essentially half the S&P. That being the AI trade.
The interesting thing about international markets is a lot of stocks overseas are non AI plays. I I tend to look at the 52- week low list for my ideas. Uh I like to look at things that people hate.
You're watching Excess Returns. I'm Matt Ziggler. Paul Westerberg once told me, "I never travel far without a little big star.
I'll counter that lyric with some Alex Chilton of my own. I never travel far without a little Peter Bfar. Peter, welcome to X truths.
Thank you, Matt. As a fellow music fan, I appreciate some good uh musical quotes. — You know, we got to throw them in there whenever we can. It's great to see you. You guys already know, but CIO at one point, BFG Wealth Partners, author and editor of the book report, all the places. Hey, there was some weird stuff in markets this week. Where do you want to start? the midterms. You care. You've been napping under the desk. What's going on?
Well, every silver lining has a touch of gray. — Oh. Oh, here we go. This is what we're here for. Should I just, — You know, that silver lining of of of AI um over the past 3, four weeks all of a sudden is a bit gray and a bit cloudy and uh you know that that's the story.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai data center leases
- data center financing costs
- memory chip supply
- consumer demand signals
- oil inventory dynamics
Companies and tickers mentioned
- MU
- IREN
- CoreWeave
- Micron
- IREN
- OnePoint BFG Wealth Partners
Watch the episode
Watch “The AI Trade Is Cracking | Peter Boockvar on What to Own Instead” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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