Why Are Stocks Tanking? Fund Manager Explains Tech Rotation | Sam Rahman
Speakers
Sam Rahman
— Portfolio Manager, Hedgeye Asset Management
Summary
Sam Rahman, Portfolio Manager at Hedgeye Asset Management, explains the current tech selloff as a near-term unwinding of overcrowded AI semiconductor positions. He remains bullish on the AI capex boom into 2027, favoring semiconductor and memory stocks, while warning that Meta is structurally vulnerable to AI disruption. He also sees Apple and Alphabet as well-positioned, and expects cooling inflation and lower bond yields to benefit housing, financials, and long-duration bonds.
- Tech selloff driven by profit-taking in over-owned AI semiconductor names; near-term pullback likely but long-term trend intact.
- Semiconductors and memory stocks remain the primary beneficiaries of continued hyperscaler AI capex through 2027.
- Meta faces existential risk from AI reducing social media engagement; lacks competitive moat in compute, platform, and distribution.
- Apple poised for an AI-driven upgrade cycle and entry into home robotics; ecosystem lock-in provides durable growth.
- Alphabet effectively managing AI search threat with Gemini; YouTube remains a hard-to-disrupt asset.
- Hedgeye sees bond yields having peaked with cooling inflation, creating tailwinds for housing, financials, and long bonds.
- Nasdaq 100 expected to end the year positive despite summer digestion.
Ideas
Capex boom drives semiconductor outperformance.
The hyperscalers are spending massive capex on AI buildout, and the market has rewarded the beneficiaries of that spend: semiconductor and memory stocks. This capex boom will continue into 2027, driven by data center buildouts and future enterprise AI adoption, supporting long-term outperformance for chip and memory companies.
Meta vulnerable to AI disruption.
Meta faces existential risk from AI reducing social media engagement, lacks innovation, doesn't control compute, platform, or distribution, and has failed at new ventures; it is particularly vulnerable relative to competitors.
Apple innovation and upgrade cycle ahead.
Apple is poised for a massive upgrade cycle driven by AI-related software features and will be a serious player in home robotics; its ecosystem lock-in ensures durable growth, with services growing faster than hardware.
Google manages AI threat well.
Google has successfully integrated Gemini to offset AI search risk, YouTube is an incredibly hard-to-disrupt asset, and AI overviews may maintain monetization; growth remains double-digit.
Bond yields peaked, buy bonds.
Inflation is expected to cool, bond yields have peaked, and declining yields will be positive for the broader economy; Hedgeye forecasts yields to come down.
Lower yields boost housing.
Bond yields have peaked and inflation will cool, bringing down yields and making mortgages more affordable, benefiting housing and other rate-sensitive industries.
Financials benefit from lower yields.
Financials benefit from lower bond yields and easing credit conditions as inflation cools; they are positively exposed to the rate-sensitive theme.
