The podcast explores the recent volatility in software stocks and the broader AI trade, questioning the sustainability of high valuations amid AI disruption risks. Ryan Hammond, a portfolio strategist at Goldman Sachs Research, notes that software stocks have experienced a significant valuation derating, approaching levels seen during the global financial crisis. This is attributed to investors reassessing long-term growth prospects in light of emerging AI technologies. Hammond suggests that while AI-driven CapEx spending is increasing, the market is scrutinizing how effectively companies are monetizing these investments, leading to performance dispersion among AI-centric stocks. The conversation also highlights a broadening market trend, with cyclical stocks outperforming due to expectations of accelerating economic growth.
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