Oct 23, 2026 · 44 min
AI spending doubts expose pockets of market strength
Parts Of Tech Showing Strength Amid Sell-Off… And A Catch-Up Call In Oil 10/23/26
The sell-off tests whether heavy AI investment can produce returns while rates, credit stress, geopolitics, and consumer costs reshape the market.
- 1Investors are questioning AI spending returns as credit stress, inflation, and the Federal Reserve’s rate path pressure technology stocks.
- 2Software, cybersecurity, consumer stocks, and energy offer pockets of resilience despite broad market weakness.
- 3Oil services may catch up with integrated producers, while earnings and options positioning sharpen the next trading decisions.
Don't miss
The episode’s clearest test of the AI boom is the finding that fewer than 15% of surveyed enterprise CFOs can measure returns on their AI investments.
The brief
Technology stocks enter a second weekly decline as investors question AI capital spending, uncertain returns, credit stress, inflation, and the Federal Reserve’s next move.
Michael Kantopoulos of Janus Henderson discusses falling Treasury yields, defensive positioning, credit spreads, high-yield bonds, and the possibility of more aggressive rate increases.
The panel finds selective strength beyond technology, from Williams-Sonoma’s affordable luxury demand to software, cybersecurity, energy, and possible activity around Instacart.
Middle East tensions raise questions for crude, while Carter Worth argues oil-service companies such as Schlumberger and Halliburton may catch up with integrated producers.
The sharpest AI question is financial: fewer than 15% of surveyed enterprise CFOs can measure returns, challenging whether corporate spending can continue without clearer benefits.
Earnings and options positioning set up the next test, with final ideas in NVIDIA, JPMorgan, Schlumberger, and XMAG.
What was said on this episode
31 statements · 17 positive · 11 negative · 1 mixed · 2 neutral
The AI trade is not over.
“I don't think the AI trade is over by any means.”
Listen at 1:32
Investors should consider adding SMH or NVIDIA on weakness.
“if you're adding to semis here on some weakness, and I don't mean necessarily the whole group, but if you want to add the SMH or if you want to add to NVIDIA, I think this is a very interesting time.”
Listen at 2:42
Higher prices without growth would produce stagflation.
“if we don't have the growth, yes, you've got stagflation.”
Listen at 8:32
Stable rates and continued growth would benefit the economy.
“if rates do start to stabilize and growth does continue, that will be a good thing for the economy.”
Listen at 8:57
Investors may consider Meta but should not rush into it.
“I think Meta is a place that you might want to look. Again, I wouldn't rush into that”
Listen at 10:16
Investors should avoid semiconductor stocks.
“at semis, I would not be involved here.”
Listen at 12:01
Interest-sensitive industrials and small caps offer better short-term buys than AI.
“those, I think, continue to remain areas of opportunity. So I still am in the AI trade, but I think the other areas are better buys in this short term.”
Listen at 12:25
Some beaten-down stocks are beginning to form bottoms.
“I do think, and we talk about this with the number of companies, the percentage of companies that are below even their 50-day, but those below their 200-day, some of those charts, as Carter's pointed out, you're starting to see some interesting bottoming.”
Listen at 13:00
Investors are rotating from cyclical high-valuation areas into defensive sectors.
“I've started to rotate in the market from some of the more cyclical, you know, higher valuation concentrated areas to. Some of the more defensive plays that are out there, the health care, staples, utilities, etc.”
Listen at 13:56
The Fed should raise rates by 50 basis points.
“if they do what's really needed, they would hike 50 basis points, in my view.”
Listen at 14:47
A Fed hold would lead to a higher 10-year Treasury yield.
“if the Fed holds next week, we will see a higher 10-year as the follow-through.”
Listen at 15:42
Credit-market stress could increase during 2027.
“as we get into 2027, And perhaps, you know, later into 2027, I do think you could have more and more stress permeating throughout the credit markets”
Listen at 17:38
The investment team is avoiding corporate credit.
“we're avoiding corporate credit.”
Listen at 17:54
Instacart could be an obvious acquisition for a larger conglomerate.
“I could see something like this would be an obvious buy into some of a larger conglomerate.”
Listen at 19:51
Visa and Mastercard are overextended and should be sold or faded.
“So Visa and MasterCard stretched far above trend, and I would fade them.”
Listen at 23:33
Williams-Sonoma can probably continue to be held.
“I think you actually can probably continue to hold it.”
Listen at 25:44
Williams-Sonoma’s valuation is a concern at 24–25 times forward earnings.
“I think my only concern here is the valuation. And now trade's like 24, 25 times forward earnings.”
Listen at 26:42
Lower rates reopening housing are unlikely in the short term.
“I don't think we're going to see that in the short term as much as people want to. And hopefully that happens. I don't think it's around the corner.”
Listen at 27:01
Investors should remain long Williams-Sonoma.
“it's a stay long, be long.”
Listen at 27:10
Investors should trade convergence between oil services and integrated energy.
“I think you play for convergence.”
Listen at 31:37
The OIH oil-services ETF is likely to rise.
“I think you play higher here.”
Listen at 32:19
SLB has sufficient earnings power to support the oil-services thesis.
“I do think the earnings power of SLB is there. And I agree with Carter.”
Listen at 33:02
Oil services versus integrated energy is more compelling as a relative-value spread trade.
“I think it's a bit more compelling as a relval trade where you can keep on and take off as a spread.”
Listen at 33:19
Fewer than 15% of surveyed enterprise CFOs could measure AI investment returns.
“less than 15% actually could even measure. the return that they're getting on the AI investments.”
Listen at 34:31
Leading open-source models lag frontier models by about four months.
“most of the open source models today At least the leading ones, they are just four months behind the frontier models”
Listen at 36:46
The profitability of AI-generated revenue remains uncertain.
“at what point is that revenue really going to be used profitable?”
Listen at 39:36
The burden of proof has shifted onto AI bulls and buyers.
“The burden of proof has shifted”
Listen at 40:13
Investors should buy NVIDIA after its three-week sell-off.
“NVIDIA, three-week sell-off to the penny to a rising 150-day moving average. Buy it.”
Listen at 42:51
Investors should own JPMorgan to benefit from determining capital costs.
“I want to be on the side determining or helping to determine that cost. JP Morgan.”
Listen at 43:01
Investors should consider Schlumberger as an energy position.
“think about Schlumberger. SLB, I guess, is now what we call it.”
Listen at 43:15
XMAG provides S&P 100 exposure with less AI concentration.
“XMAG is a way of getting them SPO 100 without being so concentrated in AI.”
Listen at 43:19
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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