AI Trade Reality Check: Rates, Credit, and Tech Valuations

Market panelists assess a week marked by hotter CPI/PPI data, underwhelming bank earnings, and a sharp selloff in AI-related names including CoreWeave, neoclouds, and semiconductors. The discussion centers on whether higher cost of capital and debt financing are becoming key differentiators in the AI trade and what that means for tech valuations and market rotation.

■ Macro and market setup
- Hotter CPI and PPI data alongside bank earnings
- Outlook for yields and potential further increases
- Defensive rotation and broadening out trade

■ AI trade and financing
- Pressure on CoreWeave, neoclouds, and semis
- Cost of capital, leverage, and credit as differentiators
- Return on AI capex and a reality check on spending

■ Tech valuations and earnings
- Tech as worst-performing sector of the week
- Valuation premium versus market and history
- Debate on buying beaten-down names before earnings
- Anthropic IPO repricing and sentiment

■ Investment approach
- Quality fixed income as a shock absorber, including Treasuries and munis
- Selective exposure to the AI theme
- Watching upcoming tech earnings and guidance for direction

For investors and market observers tracking the AI trade, rate-sensitive sectors, and technology earnings, the discussion outlines key factors for evaluating cost of capital, valuation compression, and portfolio positioning. It highlights areas to monitor in upcoming earnings and financing conditions.