Market rotation holds as AI uncertainty keeps tech volatile

Speakers

Jay Woods — Chief Global Strategist at Freedom Capital Markets

Doug Boneparth — President of Bone Fide Wealth

Alex Kantrowitz — Founder of Big Technology

Summary

The market is experiencing a rotation where technology stocks are underperforming ("sludging") while other sectors like the Dow and Consumer Staples (e.g., Coke) are hitting new highs.
There is a significant divergence in AI sentiment; while the market believes AI is transformative, uncertainty remains regarding which specific layer (chips, models, or apps) will monetize effectively, leading to extreme volatility.
Tech giants are spending over $600 billion on CapEx, a figure exceeding the Apollo Moon Program, driven by the existential need to transition platforms (e.g., from websites to AI agents).
A "flight to safety" is benefiting physical hard assets like Gold, while digital assets like Bitcoin are failing to capture this specific defensive bid.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
PRECIOUS METALS /GOLD	WATCH	Jay Woods Chief Global Strategist at Freedom Capital Markets	There is a "flight to hard assets" occurring, with Gold holding up well and Central Banks buying. Investors are seeking safety, but they are choosing physical assets over digital ones (Bitcoin is not participating in this rally). Gold prices holding firm despite a massive rally; Silver has pulled back from highs. The price action is described as "wild" and "crazy," implying a high risk of a drawdown if entering late.	7:21
AI INFRASTRUCTURE / COMPUTE / CHIP STOCKS /TECH SECTOR	WATCH	Alex Kantrowitz Founder of Big Technology	The market is in a period of high volatility regarding AI stocks because investors cannot yet identify the ultimate winners. Uncertainty is high. Investors don't know if value will accrue to chipmakers, model builders, or app developers. Consequently, earnings reports will cause "wild swings" as the market aggressively reprices based on limited data. Tech giants are spending $50B over expectations on CapEx, signaling a massive, blind bet on transformation. Companies overspending on CapEx without immediate returns could punish stock prices.	1:47
MIDCAPS /SMALL CAPS /INTERNATIONAL	LONG	Doug Boneparth President of Bone Fide Wealth	The speaker advises looking away from US Large Caps and focusing on Midcaps, Small Caps, Developed International, and Emerging Markets. These "boring" sectors are becoming exciting because they offer better valuations and diversification compared to the crowded US tech trade. They are coming off a strong performance in 2025 and offer a way to stay invested without overexposure to US tech volatility. International markets had an "amazing 2025." Global macroeconomic instability or trade wars.	1:19
SOFTWARE SECTOR	LONG	Jay Woods Chief Global Strategist at Freedom Capital Markets	The software sector is currently "sludging" and trading at six-year lows relative to the S&P 500. The speaker is "nibbling" here for a bounce. The selloff is viewed as overdone ("oversold"). With major earnings reports coming from AppLovin, Unity, and Datadog, a stabilization could trigger a "fast and furious" relief rally. 17% of the S&P made new highs recently, but software lagged. The speaker eyes a specific technical entry around the $77 level (referencing a software ETF proxy). If the price breaks below $75, the technical setup fails, and the trade becomes a long-term "bag hold" or requires an exit.	—
SOFTWARE SECTOR	LONG	Doug Boneparth President of Bone Fide Wealth	While the S&P 500 rarely offers dip-buying opportunities due to speed, the software sector is showing "meaningful discounts." If you believe in the long-term viability of these companies, the current negative sentiment provides a rare discount entry point that isn't available in the broader index. Comparison to the broader market which is near highs. Continued sector rotation away from tech.	—