Unprofitable and small-cap tech risk rises
The guest warned that the tech rally has entered a riskier phase characterized by unprofitable and small-cap tech stocks outperforming mega-cap leaders.
The argument
Unlike the early stages of the bull market led by highly profitable 'Magnificent Seven' companies, recent action shows unprofitable tech and small-cap tech leading, reminiscent of the late 1990s dot-com bubble's final stages.
The thesis, stress-tested
✓ What validates it
- ✓Goldman Sachs AI Beneficiaries Index experiences a sharp multiple contraction
- ✓A spike in failures or bankruptcies among unprofitable tech firms
▸ Risks discussed
- ▸Short-squeeze dynamics in unprofitable names
- ▸A sudden wave of M&A activity in small-cap tech
Hear it yourself
"And if it stays in that range, then eventually those prints are gonna go to zero for the month. You could still get a flat month at $94 oil if a month earlier was $94 oil. And so the the the thrust of this inflation, I think, is gonna, start to calm down, you know, unless we truly hit back in situation where we're we're gonna take oil back to a $120 a barrel or something. I don't think that's likely, but who in the heck knows with, where this is gonna be at? I still think the best case is that this is is winding down and will wind down the balance this year. Leasing probably stays elevated, until later this year."
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