Name: We Answer the Number One Question Facing Investors Right Now | WDWL
Uploaded: 2026-07-13T21:00:22+00:00
Duration: 2275 s

Speakers

Nick Colas — Co-Founder, DataTrek Research

Jessica Rabe — Co-Founder, DataTrek Research

Josh Brown — CEO, Ritholtz Wealth Management

Summary

Josh Brown, Nick Colas and Jessica Rabe tackle the key question of whether AI-driven tech leadership is cooling. Nick argues the US economy is now structurally recession-resistant, justifying higher equity valuations. Jessica presents data showing tech's extreme outperformance is due for a relative mean reversion, and that within tech a rotation from expensive semis to the cheaper Mag 8 is likely. Josh adds high conviction in semiconductor capital equipment stocks. Historical Nasdaq patterns suggest the bull market can continue, with pullbacks as buying opportunities, barring a Fed rate shock.

Nick Colas explains why the US economy may be recession-resistant (services shift, better management, policy put, etc.).
Jessica Rabe shows tech (XLK) hit a 100-day relative extreme vs S&P 500, signaling potential near-term underperformance.
Within tech, semis trade at ~52x forward earnings vs Mag 8 at ~26x, making a rotation into cheaper mega-cap names likely.
Josh Brown expresses strong conviction in semiconductor capital equipment stocks as the cleanest way to play hyperscalers building their own chips.
Historical analysis of Nasdaq bull cycles after a down year suggests the current run could last another 1–2 years.
Despite the constructive outlook, a Fed policy shock remains the primary risk to tech valuations and the broader market.

Ideas

Nick Colas Co-Founder, DataTrek Research 12:46

US recession resistance supports high equity valuations.

The US economy has become structurally recession-resistant due to a services-based economy, less energy intensity, better-managed companies using technology, more educated workers, rapid policy responses, a gig economy buffer, and higher government spending. This steady economy yields stable earnings and cash flow growth, supporting higher valuations for equities. The S&P 500's 20x earnings multiple is justified, not irrational exuberance, because earnings are less likely to drop due to recession.

Jessica Rabe Co-Founder, DataTrek Research 23:46

Tech likely to underperform S&P in coming months.

Technology (XLK) outperformance versus the S&P 500 recently hit a 100-day rolling extreme of 25 points, a 3+ standard deviation event seen only 0.7% of the time since 1999. History shows that such extremes tend to revert, with tech underperforming over the following 100 trading days (through late October). The prior extreme in 2023 saw only a mild pullback, but the 1999-2000 episode saw sharp underperformance once the Fed hiked rates. Though a solid labor market offsets risk, a hawkish Fed under the new chair is a key risk. Near-term it is reasonable to expect tech's relative return to pull back toward its long-run average of 1.2 points of outperformance.

Jessica Rabe Co-Founder, DataTrek Research 27:00

Rotate from expensive semis to Mag 8 mega-caps.

Within tech, semiconductor stocks have seen massive earnings revisions (next-year estimates up ~33% avg) and trade at 52.5x forward earnings, more than double the 25.9x multiple of the Mag 8 ex-Tesla. With semis up 168% YTD, the bar to keep outperforming is much higher. A mechanical rotation is likely as concentrated gains force money staying in tech to flow into cheaper, fundamentally solid names. The Mag 8's lower collective multiple and still-strong expected earnings growth make it the obvious destination for catch-up in H2 2026.

Josh Brown CEO, Ritholtz Wealth Management 32:10

Buy semi capital equipment on chip buildout.

The hyperscalers' massive push to build their own chips creates a direct, concentrated demand for semiconductor capital equipment. This capital equipment business is a better way to play the AI buildout because it matters less who is ultimately selling finished chips—as long as someone is making chips, the equipment makers benefit.

Jessica Rabe Co-Founder, DataTrek Research 36:14

Nasdaq bull run likely extends, buy dips.

After three straight 20%+ years following a down year, the Nasdaq has historically extended its rally into a fourth year 67% of the time, with an average gain of 5.1% (16.8% when excluding losing years). The current setup matches two prior episodes (late‑1990s and 2019-2021), both of which saw multi-year runs before a Fed-driven bear market. As long as a rate shock is avoided, history suggests the Nasdaq should continue rallying beyond 2026, and pullbacks should be treated as buying opportunities.

We Answer the Number One Question Facing Investors Right Now | WDWL

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