Nov 10, 2026 · 58 min
Market breadth challenges the AI trade’s dominance
Can the Stock Market Survive a Tech Meltdown?
The episode tests whether technology’s sell-off signals a broader market breakdown or a rotation into healthier leadership.
- 1Semiconductor weakness masked meaningful strength in insurance, pharmaceuticals, staples, and other sectors.
- 2Mega-cap earnings beats increasingly fail to lift share prices, suggesting investors are raising expectations faster than companies can exceed them.
- 3The dot-com bust shows technology can suffer a bear market while many other sectors remain resilient.
Don't miss
The hosts show how the dot-com collapse devastated technology while leaving many other sectors relatively strong, complicating the idea of an all-market crash.
The brief
Michael Batnick and guest co-host Matt Sermonaro examine a sharp market reversal, asking whether semiconductor weakness marks an AI bust or a rotation beneath the major indexes.
The sell-off was concentrated: technology and semiconductors weakened while insurance, pharmaceuticals, staples, and other sectors held up or reached new highs.
Forward earnings remain strong for Nvidia, but mega-cap companies increasingly beat estimates and still fall the next day—a warning that investor skepticism is rising.
The hosts revisit the dot-com bust, value-versus-growth performance, and Nasdaq history to argue that a technology bear market need not sink every sector.
Hot inflation data, shifting rate expectations, and a case for MSCI as an AI beneficiary broaden the discussion beyond the market’s most crowded names.
What was said on this episode
23 statements · 12 positive · 7 negative · 3 mixed · 1 neutral
Stock-market performance is driven by corporate earnings.
“what drives the stock market are earnings”
Listen at 3:31
NVIDIA fell approximately 12% across the two-day sell-off.
“It fell 12%. It was down 9% the first day, I believe, 3% the next day.”
Listen at 7:57
Six S&P 500 sectors were within 3% of all-time highs.
“there's six sectors within 3% of an all-time high”
Listen at 10:18
NVIDIA’s forward earnings estimates reached an all-time high.
“NVIDIA's forward earnings estimates literally hit an all-time high.”
Listen at 13:05
- Matt Sermonaroon Stock valuation multiplesMixed14:03
A lower earnings forecast can coincide with a higher stock price if valuation multiples expand sufficiently.
“you could have a 10% fall in the forward earnings estimates, but if the PE goes from 10 to 16... the stock's actually up.”
Listen at 14:03
The other 493 S&P 500 companies were expected to outgrow the MAG-7 this quarter.
“32.6% year-over-year earnings growth expected for the 493 this quarter. And then the MAG-7 are expected to grow earnings by 22.6%.”
Listen at 15:03
The S&P 493 outperformed the MAG-7 because their earnings revisions improved faster.
“the 493 have been outperforming the MAG-7 over the past few months. And it's because their forward earnings have been getting revised higher at a faster rate than the MAG-7.”
Listen at 17:44
Four of six MAG-7 companies beat estimates but fell 3% on average the next day.
“in q3 this quarter four of six have beat so far and on average they've fallen three percent the next day”
Listen at 19:14
Mega-cap earnings beats followed by sell-offs support the bearish case.
“this is unequivocally a feather in the hat and the cap of the bears”
Listen at 21:07
Jensen Huang represents unusually high key-person risk for NVIDIA.
“outside of Elon Musk, I would think that Jensen is number two for key man risk”
Listen at 23:40
A serious adverse event involving Jensen Huang would drive NVIDIA’s stock substantially lower.
“if something bad happens, this stock is going way lower.”
Listen at 24:03
NVIDIA’s forward earnings growth has been roughly three times its stock-price growth.
“the forward earnings growth is tripling the stock price growth”
Listen at 26:22
Michael Batnick does not think the AI trade will completely collapse.
“Do I think that it's all going to come crashing down? No, I do not.”
Listen at 30:50
- Matt Sermonaroon Value ETFs VLUE and IVEPositive35:10
Value ETFs VLUE and IVE had year-to-date returns of 37% and 14%, respectively.
“VLUE is up 37% year to date. IVE is up 14%. So that's like a greater than 20% spread between those two”
Listen at 35:10
During the dot-com bust, technology and communications fell while other sectors rose overall.
“tech and comm services, as we all know, got annihilated during the tech bubble. Everything else was actually up from the dot-com peak. to the absolute low of the dot-com bubble.”
Listen at 39:36
If today resembles the dot-com bubble, other market areas should perform unless a severe global recession occurs.
“there should be plenty of other areas of the market that work unless we experience like a massive global recession”
Listen at 41:58
Excluding the tech bubble, NASDAQ rose 8.1% on average three months after this signal.
“after three months, the NASDAQ is up 8.1% on average if you don't include the tech bubble”
Listen at 43:59
Excluding the tech bubble, NASDAQ 100 gained 21% on average over twelve months after this signal.
“Over a 12-month period after this happens, with, again, stripping out the tech bubble, the NASDAQ 100 is up on average 21%.”
Listen at 44:10
Stocks rising on hot CPI historically preceded a 6.2% average three-month return, positive 91% of the time.
“The average forward three-month return from past instances of that is 6.2% and 91% of the time, the market has been positive.”
Listen at 48:51
MSCI could quickly reach $1,000 if it breaks above $700.
“if it breaks out, I think above, let's just use 700. This thing could go to like $1,000 really quick. That's my take.”
Listen at 51:12
MSCI revenue tripled since 2015 and operating margin reached 56%.
“Revenue has tripled since 2015. The operating margin is stair-stepping higher, hit 56% over the past 12 months.”
Listen at 51:36
Matt Sermonaro would sell MSCI after a failed break-and-retest of its trendline.
“on a break and retest. and then getting rejected by that trend line, I would sell it.”
Listen at 53:18
Retail-stock weakness does not imply an imminent economic downturn.
“when people say like, uh-oh, retail consumer stocks are crashing, like the economy is about to roll over. No, dumbass, it has nothing to do with anything.”
Listen at 56:07
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.
Weekly email
State of the Pod, every Monday
The week's most-discussed names and stories from podcasts, with the moments behind them. Free, five minutes, unsubscribe in one click.