Bubble Beacons, Prediction Friction, and a Data Center Disconnect 8/14/26

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**Kelly Evans** (1:00)
Thank you very much, John. The Small Caps continue their huge year as the Wrestle is the only major average in the green today. I'm Kelly Evans and welcome to The Exchange. The Nasdaq is taking a breather as shares of Applied Materials ticker AMAT fall after earnings. Broadcom, SpaceX and Workday all weighing too. And our guest today is warning that the Semi space is in a bubble. We look forward to that discussion in just a moment. But the small caps continue to outperform. The Russell 2000 hitting a new all-time high today, bringing its year-to-date gain to 23 percent, outperforming the Nasdaq, which is up less than 15 percent, and the S&P 500, which is up nearly 14
Plus, we'll talk about this no good, very bad week for prediction markets. We'll wrap up the news flow and see what measures may be next. But we begin with the S&P 500 heading for its third straight weekly gain and the small caps, which are absolutely flying this year. Mark Dizzard is the CIO of Huntington Bank and he's here for our opening exchange. It's good to see you again. Welcome.

**Mark Dizzard** (1:57)
Good to see you, Kelly.

**Kelly Evans** (1:58)
Thank you. We don't need to overly talk about small caps, but there are so many investors in this space who are thrilled and at this rate, they're going to be up 40% by the end of the year. I mean, do you have any kind of broad thoughts about that?

**Mark Dizzard** (2:11)
Yeah, we actually love small caps. It's one of our tactical positions that were overweight. And what you're seeing is that broadening of earnings. I mean, it's definitely happening in large cap too, across different sectors. But it's happening with small caps, it's happening with mid caps, it's happening internationally as well. So I think it's that broader earning story and it's setting up really well for small caps.

**Kelly Evans** (2:32)
A lot of people do say the Russell 2000 has become somewhat of an AI trade. Is there some truth to that with some of those smaller kind of component makers and tech players that feed into the AI trade?

**Mark Dizzard** (2:43)
There's definitely some truth, for my opinion, there's definitely some truth to that. In the AI ecosystem, the way the technology is going, you can see it play out where it was the hyperscalers moving to the chip makers. What's the next phase? Where are the implementers and all the other pieces?

**Kelly Evans** (2:57)
The implementers, I like that. Talk about that for a second.

**Mark Dizzard** (3:00)
Yeah, I just think that's where the AI trade has evolved to. So you're also going to see it in large cap. So when all the hyperscalers, and I know we could talk about the capital expenditures and how much money and is that going to be profitable in the future, but that was kind of phase one. Phase two is really showing up in the chip makers and you're seeing that next piece of it. Chip makers ran parabolically in a lot of ways. And now the next piece is who's going to be doing the implementing. So it's using what they've built with the compute power, using with the data centers, but actually impacting businesses. So you're going to see it spread out to industrials, materials, energy companies, all the other sectors, Small Cap's also going to play a role there.

**Kelly Evans** (3:41)
And I wanted to ask because there is an AI component to that, but you're right about the broadness too. Just yesterday, we were talking to Jonathan Krinsky, and he saw the Russell 2000 restaurants having one of their best days ever. They had this breakout move, Texas Roadhouse and so forth. Like just to make the point, if people wonder why are Small Cap suddenly doing so well, I mean, the answer I guess is there's a lot of reasons. Lower rates certainly help. So where do we go from here? Do you pile into those, you know, to the Small Caps? Do you try to look like you're saying to the implementers, we've had industrials, we've had financials at kind of pretty much all time highs lately. Do you have to overthink it? Can you just own the S&P 500? You're still at 14, 15%.