A Morgan Stanley Investment Management senior portfolio manager says the pullback witnessed in AI memory and chip names is an opportunity for investors to load up on dips.
In a new CNBC interview, Andrew Slimmon says he remains bullish on companies benefiting from the massive AI spending, despite the recent retracement.
Slimmon believes that the sell-off is helping to keep the uptrend alive.
“I don’t think they’re expensive, but they’re crowded. In other words, it has captured the kind of zeitgeist of the momentum traders. And when that happens, you’re going to have sharp sell-offs like we’re having. I’d argue it’s healthy.
It’s good for the markets because ultimately, what you don’t want to see is so much euphoria that it ends badly. And I suppose that the likelihood that the Fed’s gone from for sure cutting to maybe raising. That’s probably caused a little bit of the bubble to deflate.”
Slimmon also notes that the high prices of AI and memory chip stocks are justified by fundamentals, and believes the sell-off is an opportunity to buy on dips.
“Their earnings revision story has validated these stocks. These stocks have gone up a lot, but so have their earnings and their earnings revision. If you look at some of these memories and some of these chip stocks, they’re not trading at high multiples because the market is acting rationally. It knows that these are very cyclical earnings. That doesn’t strike me as like, you know, kind of euphoria when people are acting very irrationally. The market’s pricing them appropriately.”
Follow us on X, Facebook and Telegram
Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Surf The Daily Hodl Mix
Generated Image: Midjourney