Bull Case for Coreweave, Putin Suggests Summit, and the Read on Retail 10/19/26

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Kelly Evans (1:00)

You're listening to The Exchange. Here's today's show.

Thank you very much, Scott. Tech stocks are bouncing back big time today, as the market faces some key earnings tests this week. I'm Kelli Evans, and welcome to The Exchange. The Nasdaq, as you can see, at 1.2% today, leading the major averages. The S&P 500 up half a percent, the Dow fractionally higher. And remember, the Nasdaq shed more than 4% last week, and it's the memory and software names leading the way. Sandisk still up about 6%, Western Digital 5%, as we wait to hear CapEx plans from big spenders like SpaceX on Tuesday and Meta on Wednesday. And Western Digital CEO Irving Tan will be with us, post earnings later this week. As for Coreweave, it's rebounding a little bit today.

There are now negative, the shares are down 1%.

Goldman upgrading it to buy, calling the sell-off overdone. We'll have more on that in just a moment. But let's begin with a broader look at where we are in this AI and stock market cycle. Despite the tumble in certain AI stocks, the S&P 500 is barely below its all-time high two weeks ago. And our next guest warns, this may be as good as it gets for a little while. Let's bring in Michael Kantrowitz. He is the Chief Investment Strategist at Piper Sandler. Michael, it's good to see you. It's been a little while.

Michael Kantrowitz (2:16)

How are you, Kelly?

Kelly Evans (2:17)

And I jumped right out to me that you were saying, look, we've had all actually these positive earnings and economic surprises over the past 15 months. Yeah, that rings true. Brings us to today where you're kind of saying the way the market thinks about these things. Can we keep getting good news from here?

Michael Kantrowitz (2:34)

Yeah. I mean, I think we can just to be clear, I think we can continue to get good news. I just think it's important you look back 15 months and just the increase in macro data, in earnings data, the positive surprises in both and the increases in expectations along the way have all been a massive trend over the last several quarters that's obviously led to a lot of enthusiasm and some of the massive out performance we've seen in higher beta stocks. And my point today is just to highlight that looking out the next 12 months, we're certainly, I think we're unlikely to repeat that trend in better data, better breadth and better expectations. And that's why we've been recommending clients start to, for several months now, start to reduce their exposure to some of the high beta areas of the market and increase their exposure to some of the higher quality areas within the market across sectors and themes.

Kelly Evans (3:29)

So let me put the question a little differently then, because maybe you can say exactly what you would describe as high beta, but the AI infrastructure names have certainly kind of been the tip of the spear.

Michael Kantrowitz (3:39)

Absolutely. High beta is simply defined by either a five-year price beta measure or even a one-year beta measure within all areas of the market. So yes, the AI trade and the build out part of it is absolutely a high beta, high momentum, but also high earnings revision part of the market.

I think a year ago, you could have thrown a dart and made a good amount of upside really in many, many stocks. I think it's going to get harder as we go forward and the bar for expectations has shifted quite a bit in the last year and a half.

Kelly Evans (4:14)

High-quality, what does that look like if people, you're saying maybe because there's two different ways you could go. You could say, yeah, you want exposure to those AI infrastructure names, sell off, it's an entry point. You're saying something different, which is be careful there still.

I'll say the likes of Coreweave, you can confirm whether Neo Clouds are part of that group. So where would you encourage people to look instead?