A senior portfolio manager at Morgan Stanley Investment Management says the decline in AI memory and chip names is an opportunity for investors to profit from dips.
In a new CNBC interview, Andrew Slimmon say he remains bullish on companies benefiting from massive AI spending, despite the recent retracement.
Slimmon believes the sell-off helps keep the uptrend alive.
“I don’t think they’re expensive, but they’re crowded. In other words, it’s taken over the zeitgeist of the momentum traders. And when that happens, you’re going to have sharp selloffs like we have. I’d say 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 guess the odds of the Fed have gone from definitely down to maybe up. That probably caused a small part 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 are up a lot, but so are their earnings and their earnings revisions. If you look at some of these recalls and some of these chip stocks, they’re not trading at high prices because the market is trading rationally. The market knows these are very cyclical gains. That doesn’t strike me as some kind of euphoria when people are trading very irrationally. The market is pricing them appropriately.”
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