Scott Chronert

The set up is for decent earnings momentum into the back half of the year, driven by Q1 strength broadening beyond semiconductors and into other hardware and AI-attached companies, which will drive market returns.

The semiconductor part of the market has become attractive on valuation (PEG ratios have compressed) because earnings growth has been stronger than price action. The picks-and-shovels play on the AI buildout, alongside hardware, remains the highest-conviction component. The market has not yet fully priced in the magnitude and duration of the remaining AI buildout, which supports further upside for semiconductors.

Chronert states the software sector has "found a bottom" and has already discounted the hit to terminal multiples regarding AI disruption. CrowdStrike (CRWD) beat earnings estimates. The market over-penalized software stocks on AI fears. With valuations reset and fundamentals remaining intact (as evidenced by CRWD's beat), the risk/reward has shifted to the upside. LONG. Software is now a defensive contrarian play against the hardware/semiconductor volatility. Persistent high interest rates (10-year yield) compressing growth valuations.

Chronert states the software sector has "found a bottom" and has already discounted the hit to terminal multiples regarding AI disruption. CrowdStrike (CRWD) beat earnings estimates. The market over-penalized software stocks on AI fears. With valuations reset and fundamentals remaining intact (as evidenced by CRWD's beat), the risk/reward has shifted to the upside. LONG. Software is now a defensive contrarian play against the hardware/semiconductor volatility. Persistent high interest rates (10-year yield) compressing growth valuations.