In a day that was supposed to see smooth sailing higher for tech stocks after the BOJ capitulated on further rate hikes, and reset the carry trade sparking a euphoric move higher in risk overnight, we have already seen several failed breakouts due to what Goldman Tech specialist Peter Callahan writes in his latest note (available to pro subs) is "a growing investor debate whether to trust this move or not as well as what investors will re-risk into down the stretch of 2024, e.g. it is not clear the same first half GenAI playbook is what everyone has in mind into H2, with more ‘diversification’ conversations as well as selectivity across Mag7 and Semis/GenAI coming out of this downturn."
In other words, the skepticism that was sparked by Goldman's head of equity research one month ago, and echoed a few weeks later by Elliott'sPaul Singer, is starting to infect Goldman's own clients who are getting nascent doubts about the AI bubble. Which coming at a time when AI server proxy Super Micro Computer is absolutely cratering on catastrophic margins is, how should one put it, not good.
More excerpted from Callahan's note below (full note available to pro subs here).
