Tech Stocks Bounce Back as AI Concerns Begin to Ease

Speakers

Mandeep Singh — Bloomberg Intelligence

Summary

Tech stocks are bouncing due to dip buyers, but fundamental concerns remain regarding valuations and CapEx efficiency.
A valuation disconnect exists: Public companies like Palantir trade at 80x sales, while faster-growing private peers like Anthropic trade at lower multiples.
The "Software" sector is currently in a "penalty box" due to a lack of long-term revenue visibility; the market is shifting focus from "seat-based" metrics to "token consumption" metrics.
A significant portion of the 60% growth in AI CapEx is being driven by inflationary component costs (specifically memory shortages) rather than pure capacity expansion, raising questions about ROI for the spenders.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
PLTR /SOFTWARE SECTOR	AVOID	Mandeep Singh Senior Analyst, Bloomberg Intelligence	"Palantir trading at 80 times sales when ANTHROPIC... [was] at a lower multiples... valuations... were stretched... missing in the software sector right now [is] long term revenue visibility." Public software valuations are disconnected from reality when compared to faster-growing private AI firms. The sector is undergoing a regime shift where traditional metrics (seat growth) are being replaced by "token consumption." Until companies can prove visibility under these new metrics, they remain in a "penalty box." AVOID high-multiple software stocks that have not yet bridged the gap to consumption-based revenue visibility. Market sentiment could ignore fundamentals and continue to bid up high-beta tech names during the bounce.	0:22
MEMORY SECTOR	LONG	Mandeep Singh Senior Analyst, Bloomberg Intelligence	"CapEx increase is going to memory, which has really gone up so much because of the shortages... how much is for component increases right now." While there is uncertainty about the ROI for companies spending the CapEx, the destination of that capital is clear: it is flowing into components with pricing power. Memory shortages are driving up costs, meaning memory producers are capturing the value of the increased spending. LONG the Memory Sector as the direct beneficiary of supply constraints and inflationary CapEx cycles. Resolution of supply chain shortages could soften pricing power; broader tech pullback could reduce overall CapEx budgets.	—
ANTHROPIC	WATCH	Mandeep Singh Senior Analyst, Bloomberg Intelligence	"ANTHROPIC, which is growing, you know, almost ten X in the past 12 months... private valuation, they were at a lower multiples." Anthropic serves as the rational benchmark for AI valuations. Its lower multiple despite higher growth highlights the overvaluation in public proxies like Palantir. WATCH Anthropic's valuation dynamics as a leading indicator for where public AI multiples should settle. Private market opacity makes real-time tracking difficult.	0:26