Why Are “AI Stocks” Trading at Such Low Multiples? Ask ORCL (The AI Bear Case)
What’s in Today’s Report:
- Why Are AI Semiconductor and Memory Stocks Trading at Such Low Multiples? Ask ORCL (The Bear Case)
Futures are slightly higher in cautious pre-market trade as investors await the first Warsh-led FOMC decision today with oil holding near 3-month lows while the 10-Yr yield hovers near a 1-month low after mostly benign inflation data overnight.
Economically, Japanese Machinery Orders rose to +15.6% vs. (E) +9.9% y/y while U.K. CPI held steady at 2.8% vs. (E) 3.1% y/y and EU HICP met estimates at 3.2% y/y.
Looking ahead to today’s session, focus will be on consumer spending data early with Retail Sales (E: 0.5%) due to be released ahead of the bell.
Data on Business Inventories (E: 0.5%) and Pending Home Sales (E: 0.9%) will also be released shortly after the open which could impact markets but not likely meaningfully ahead of the Fed decision this afternoon which will likely result in quiet, choppy trading through the middle of the day.
Regarding the FOMC meeting the meeting statement will hit the wires at 2:00 p.m. ET before focus turns to Fed Chair Warsh’s first press conference at 2:30 p.m. ET. The more dovish the tone and favorable the commentary on the economy is in the wake of this week’s Fed meeting, the better for markets with the potential for a volatile move in either direction given the uncertainty risk surrounding the stance of the new Trump-appointed leader of the FOMC (“Fed Independence” remains a simmering source of concern).