Imminent Nasdaq pullback driven by large numbers
Gene Munster argued that the Nasdaq is poised for a 10% pullback before the end of the June earnings season due to the law of large numbers and multiple compression, despite strong underlying AI fundamentals.
The argument
Munster pointed out that even as Mag 7 revenues rose, their stock prices fell, signaling multiple compression as investors struggle to underwrite decelerating growth rates. He noted his firm divested from Nvidia due to this growth deceleration profile.
The thesis, stress-tested
✓ What validates it
- ✓Nasdaq experiences a 10% correction within the next five weeks
- ✓Nvidia's forward growth guidance decelerates in upcoming quarters
▸ Risks discussed
- ▸AI revenue monetization could accelerate faster than expected
- ▸Hyperscalers could report blowout earnings that defy the law of large numbers
Hear it yourself
"Go ahead. You No. Go ahead. So I think it's interesting the way you pose that with with rates coming down because with with wars, taking a a a pseudo hawk stance or maybe not even pseudo, maybe a hawkish stance, we we've see you would think rates would rise. Right? We saw that with with Powell where Powell cut rates back in remember that September 2024, rates actually rose on on his cut. Now we're we're talking higher rates and rates have fallen. 32% of the Russell is built on floating rate debt. 6% of the S and P is built on floating rate debt."
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