“The number one question being asked by clients is: is this a correction or the start of something bigger. While my first instinct is to say that it is a normal correction, I am beginning to see some signs of concern. First off, earnings estimates for 2H′24 are seeing revisions lower with 3Q coming down 1.4% since July 1st and 4Q coming down 0.2%. The bigger concern however is the waning ‘AI Enthusiasm.’ The circular capex cycle for the largest, most liquid companies does not appear to be ending just yet, but investors are now questioning what the return on investment will be in the future.”

 “I do think bad fundamentals in this market environment are going to get really punished. Good fundamentals — I think the bar is just higher right now for a lot of these tech companies in this earning season... And that’s a dynamic that is not necessarily going to last for a long time, but that’s sort of the environment we’re in right now.”

 “A lot of these companies, the fundamentals are just still really good... And I think so long as the fundamentals remain good, and the earnings growth outlook is still positive, and earnings estimate revisions remain in a positive direction, I don’t think the stocks are unreasonably priced.”

 “When we go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us here.”

 “The cloud giants see AI as both a threat and an opportunity and do not have the luxury to wait and see how the technology evolves. They must act now.”

 “Google and Meta CEOs both out in last 24 hours now agreeing with my AI Arms Race narrative: That AI CapEx is driven by game theory and FOMO vs. actual revenue / usage.”

 “But in many ways this looks like a much-needed correction to an extreme market position.”