Nicholas Mugalli
Institutional TMT & Macro Research, AI/Semiconductors/Policy
The AI supercycle is backed by real profit growth, not a bubble. Nasdaq-100 earnings-per-share growth just crossed 50%, faster than the post-GFC rebound and every expansion cycle of the last two decades, with revenue growth rising alongside it. Bubbles are built on multiple expansion and nonexistent earnings; this is an acceleration in real cash flow. x.com
The Nasdaq has no escape hatch until crude pulls back, as markets take fire from three sides at once. Brent near $100 drives inflation expectations, 10-year yields breaking 4.70% compress tech valuations, and a dollar index back above 101 drains global liquidity. Relief depends on Trump resolving the Strait of Hormuz bottleneck, whether by buyout, retreat or escalation. x.com
Rising S&P earnings revisions and a Nasdaq valuation far below the 2000 bubble level argue against a bull trap in US large caps. Nasdaq trades at 18x forward earnings versus over 80x in 2000. Positive breadth divergences, record short ETF exposure and put volume, and semiconductors waking up add to the case. In all 19 post-midterm instances cited, markets were very green over the following 12 months. x.com x.com
The Nasdaq's earnings growth makes its valuation look ridiculously cheap for its quality and diversification. At 23x forward earnings, EPS grew 48% over the past year and net margins are 20%; the attached chart puts ROE at 35%. Extending 18% five-year EPS growth three years implies 14x earnings then with little debt and 30% ROIC; slower growth would still imply about 15x. Beating it requires extreme concentration, a mandate most active managers cannot get from LPs. Index figures per Claude. … Show more
The Nasdaq 100 faces short-term downside because a failed push to a new high leaves crowded bullish sentiment vulnerable to a break below. Despite record institutional accumulation and a long-term bullish position, five months of chop, a failed ATH and an attempted loss of the bullish trend favor hedging rather than adding leverage. x.com x.com
Alphabet's AI capex payback is being repriced, making its post-earnings decline more than a one-day mood swing. Guidance and cloud and AI margin commentary are the near-term tests. If growth continues but the multiple compresses, the risk is duration in mega-cap AI, not a collapse in technology growth. x.com
The Nasdaq-100 looks like a good buy here. x.com
The Nasdaq 100's problem is its multiple, not hyperscaler spending. Celestica raised guidance on a red day for the index; per @TheValueist, it lifted 2026 revenue guidance from $17.0B to $19.0B and adjusted EPS guidance from $8.75 to $10.15, saying demand is now paced by supply rather than end-market weakness. x.com
AI-lab revenue growth keeps a 15% Nasdaq-100 gain the most likely year-end outcome under Brad Gerstner's framework. The top three labs reportedly reached a $130–135B combined run rate by late September; current trends point to $165–175B by year-end, short of Gerstner's $180B base-case threshold and well below his $200B bull case. x.com
AI stocks look undervalued relative to the broader market, since the S&P 500 is more stretched against its own history than the Nasdaq 100, despite the Nasdaq's higher absolute P/E. Per @MikeZaccardi, the Nasdaq 100 P/E holds at 24x. Those running capital markets dislike AI capex and AI stocks, but if the Mag 7 CEOs, excluding Apple, are right about AI, they will love the returns a few years out, just late. Both indexes could still be overvalued. x.com
Debt-funded AI building is making tech stocks vulnerable to a 25-30% pullback as rates and energy prices rise. AI company borrowing reached $466B this year versus $101B a year earlier; weekly default-insurance trading on seven AI names rose from under $2B in July to over $9B in September. Keep cash for lower prices, though 30% earnings growth and a 19x market multiple argue this is not an AI bubble. x.com
Apple's roughly 35x forward earnings premium looks unsustainable. If fear around the AI trade fades, its gains could stall or reverse. x.com x.com
