Joseph Hogue argues the AI bubble has already 'popped' because AI-leading stocks have de-rated while earnings estimates keep rising, creating buying opportunities in names like Nvidia, Micron, Oracle, Broadcom, and several cybersecurity stocks. He pairs that with a near-term bearish market outlook around sticky inflation and renewed rate-hike fears, while still calling the broader bull market intact.
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This weekly market update centers on a two-part thesis: first, that the market has already moved through the worst of the AI bubble premium compression; second, that the next few weeks could still be rough because inflation data may revive Fed tightening fears. Hogue opens by comparing current AI-stock enthusiasm to the late-1990s internet bubble, but argues the more important point is that valuations have already reset while business fundamentals remain strong or improving. He focuses first on Nvidia, saying it is down about 20% from its highs even as hyperscaler capex and AI spending remain very large. He argues that forward sales and earnings growth, combined with lower valuation multiples, make Nvidia look cheap versus its own history. …
Near term looks choppy: a hot CPI print or renewed rate-hike fears could pressure growth and AI names even if the broader thesis remains intact. The main tactical read is to expect volatility, not a clean trend, and to treat pullbacks in favored names as tradable rather than decisive.
Over the next several weeks to months, the base case is that AI infrastructure and selected software-security names recover if earnings revisions keep rising and inflation does not accelerate further. If the market starts believing the Fed is done tightening and capex trends stay strong, the valuation reset can turn into a renewed advance.
Structurally, the transcript argues that AI is a multi-year infrastructure cycle, not a one-time hype spike, and that the durable winners are the picks-and-shovels businesses supplying compute, memory, networking, servers, and security. The lasting regime implication is that earnings growth can outrun headline bubble fears, even if individual names remain volatile.
The AI bubble has already popped, and that creates buying opportunities in AI leaders rather than just downside risk.
He argues AI names have de-rated while earnings estimates keep rising, which makes the earlier bubble premium already gone.
Nvidia’s valuation has fallen sharply relative to its historical averages even though growth expectations remain very strong.
He compares current multiples to five-year average multiples and says the stock is now far below prior peaks.
A long straddle on Nvidia could be a useful way to reduce downside risk while keeping upside exposure during near-term volatility.
He recommends buying both call and put options because he expects near-term weakness but longer-term recovery.
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