Yahoo Finance

Our next guest is a tech investor on a self-declared buyer's strike, but he does say he's still bullish on the AI infrastructure trade. Paul Meeks, Harvest Portfolio Management CIO and Wall Street Beats partner, joining me now. Paul, it's great to see you, as always here. You have been on a buyer strike before when we talked. I feel I feel like 2022 vibes is what I'm getting from you at this point. What's driving that buyer strike for large cap tech?

Well, I'm not necessarily worried about the AI infrastructure trade and how we might be at a peak AI infrastructure spend. What I'm more worried about, and this is reflected more in my technical analysis than in my fundamental analysis, is the chance that the current policies pursued here in the United States could lead us to a recession. And if we have a recession, I don't want to say all bets are off. There'll be good buying opportunities among the carnage in that situation, but that's my greatest fear.

Um, and what do you think the likelihood of that recession is? I mean, most of the base case forecast we're hearing from economists is that there'll be a slowdown, um, but either way, how is that going to play out for large cap tech?

Well, it depends within large cap tech, are you consumer-facing or enterprise-facing company. If you have a company like Apple, which is essentially dominant in consumer electronics, uh they might be under pressure as the American Sumer consumer and other consumers around the world pull in on such spending. But on the enterprise side, we'll see what happens. I think when we have our hyperscalers report their results, and they'll be coming in the next three or four weeks, I think they will confirm their capital expenditures for 2025, which is really foremost for AI infrastructure and continued data center build and large language model building and inference for AI. So I am hoping, I'm expecting, unless we have a real dour outlook on the economy between now and then, probably triggered by liberation day, that uh we should have a little bit of a pop in these stocks, a little bit of a recovery when those companies confirm their AI spending, and they'll probably do that within a month from now.

And and Paul, our executive editor Brian Sozzi had the chance to speak with AMD CEO Lisa Su about the potential for a slowdown in AI infrastructure spend. Here's what she told him.

There is no question we are in the very early innings of AI. Now, you know, put some of the noise aside. So I am a big believer in this is the very, very early part of AI. Uh the need for compute continues to be immense. Uh we see that throughout all of our customers globally, and we're going to continue to invest strongly in this area because I think this is the single most important technology. I like to say it's the single most important technology of the last 50 years.

Paul, um, you know, I I feel like we keep hearing this and I feel like we're it's not quite been realized. As she said, it's very early innings. I get it. Um, but when are we going to get to like even the second inning or the third inning in this situation?

Well, of course, whenever you talk to these tech CEOs, and I really admire Dr. Lisa Su for turning around AMD. She's absolutely brilliant. But they're always going to talk their book to an extent, right? That's just PR and IR. But I think that we're going to have an extended period of large language model building. Uh we are starting to see some glimpses of inference and once we get through the inference pipeline, then we'll see some hopefully pretty cool AI agents and AI apps. But unfortunately, when it comes to monetizing those agents and apps, I still think it's not a 2025 phenomenon. It might actually be next year.

Um, and let's drill down on Nvidia for a second here because I know going back to the beginning, you said even if you fundamentally believe in the case for some of these stocks, technically it's tough. So let's drill down on Nvidia. What level are you watching there? How far down does it need to go before you think it it does get attractive here?

Well, I think valuation wise and fundamentally, it's very attractive. Um, I was hoping for some stability around 104, 105. We're trading right there right now. But uh, I'm not going to do anything before liberation day and all that uh hubbub. But I'm thinking 90 to 104, 105, where it's actually trading today, is attractive. Please don't buy it for the short term. We're not going to get a confirmation of how good their fundamentals are, probably until late in the month of May. And so make sure that you buy it for the long term, but I agree that it's going to be a big, big hit from here. And I'm very comfortable owning it for the long term at that uh dip-in price level.

Got you. Paul, good to see you. Thanks for joining us.

Good to see you.