The decline in AI memory and chip names presents an opportunity for investors to load up on dips, says a senior portfolio manager at Morgan Stanley Investment Management.
In a new interview with CNBC, Andrew Solomon He says He remains optimistic about companies benefiting from huge spending on AI, despite the recent decline.
Slimmon believes the sell-off is helping maintain the uptrend.
“I don’t think it’s expensive, but it’s crowded. In other words, it’s kind of captured the zeitgeist for momentum traders. And when that happens, you’ll have a sharp sell-off like we’re having. I’d argue that’s healthy.”
It’s good for the markets because in the end, what you don’t want to see is a lot of euphoria that ends badly. I assume that the possibility of the Fed shifting from a certain cut to perhaps raising rates. “This may be why part of the bubble deflated.”
Slimon also points out that the high prices for AI and memory chip stocks are justified by fundamentals, and he believes the sell-off is an opportunity to buy on dips.
“Their earnings revision story has validated these stocks. These stocks have gone up a lot, but so have their earnings and their earnings revision. If you look at some of these memories and some of these chip stocks, they’re not trading at high multiples because the market is behaving rationally. It knows these are very cyclical earnings. This doesn’t look to me like some kind of euphoria, you know, when people are behaving very irrationally. The market is pricing them appropriately.”
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