Mike
Long-Term Investor, Technology & Crypto
Tech stocks should recover to near all-time highs at or after earnings season, since they trade at historically low valuations of 16-22x forward earnings despite strong growth. Value stocks' fundamentals have weakened significantly from already expensive levels. Markets are pricing the worst-case war scenario, but both sides are negotiating and the US holds the cards. x.com
Capital is likely to flow back to the top AI leaders over the next 6-12 months as the broadening-out trade into smaller stocks fails. Funds sold growth stocks for that trade assuming rapid rate cuts, a stable job market and AI spending lifting small-cap earnings, assumptions that failed as in 2023-2025. The Nasdaq-100's forward P/E is compressing while growth accelerates. The Fed, still projecting one cut in 2026 and one in 2027, is likely to stay hawkish for months to tame energy prices. x.com 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
Technology's faster earnings growth could let growth and tech ETFs beat the S&P 500 over the next decade. A 2010-indexed earnings comparison puts tech near 880 versus 230 for nontech by 2026, with pre-2018 data limitations; Nasdaq-100 earnings grew 10% annually over 20 years versus 4.5% for the S&P 500. Nasdaq-100, tech, chip, growth, momentum and AI ETFs, plus Micron and AMD, are preferred despite greater volatility, drawdowns and valuation risk. x.com x.com
Forward risks matter more than good earnings for the Nasdaq now. The index looks to be topping and has a good shot at 28,000 before a rally after the midterms; tomorrow's PCE and GDP releases are unlikely to help, and this week's lows could break. x.com x.com
Anthropic's S-1 and @UncleAlpha007's claim that Microsoft is growing despite a 27% headcount cut have turned the near-term tech-equity view bullish. At least a tradable rally is expected; further upside depends on Iran developments and PCE. Stay nimble. x.com x.com
Apple's roughly 40 times trailing and 37 times forward earnings make the shares too expensive ahead of next week's results. A short looks reasonable, though a sell-the-news reaction after earnings remains uncertain. x.com x.com
US technology shares are way overvalued for realistic growth expectations. Their decline is a repricing toward more reasonable expectations, not the Black Monday-style crash some over-leveraged tech holders predict. x.com x.com
US large-cap equities do not look like a bubble at current forward valuations. The S&P 500 forward P/E is below both its five- and ten-year averages, while tech and momentum have suffered their worst five-month decline by far. x.com
S&P 500 earnings are keeping pace with prices, so this does not look like a bubble. Quarterly earnings are on track to grow 29.5%, more than twice the 10-year average of 12.6%, while the 18.7 forward P/E is just below its 19.1 decade average. x.com
Big Tech is priced on extrapolation bias, the same error made at every bubble peak, as bulls project explosive past earnings forward. Per Kailash Concepts, the 10 largest tech stocks trade at 50 times free cash flow with a 1.5 beta and a 1% total yield, while the 10 largest energy stocks trade at a 4% free cash flow yield, 24 times earnings and near-zero beta, a historic valuation gap hiding in plain sight. x.com
US tech stocks now look attractively valued after selling off into a very solid earnings season. Geopolitical risks keep growing, though, and sentiment has swung from risk-on in June to risk-off in July. x.com
