Cracks in the AI Trade, Tech Earnings Preview, Surging Airfares 10/20/26

Contessa Brewer (0:00)

At Janice Henderson, we strive to deliver better outcomes through insight-led investing, innovation for clients, and a partnership approach that's core to our identity. I'm Jessica Liancini, Head of Fixed Income Client Portfolio Management. I'm passionate about my role in investments. It allows me to partner with our clients, simplify fixed income, and support them in achieving better outcomes for their clients.

Janice Henderson, investing in a brighter future, together.

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Brian Sullivan (1:06)

Market's still a bit jittery on big tech ahead of earnings. Welcome to Power Lunch, everybody. I am Brian alongside Kelly Evans. Small cap stocks, they're actually on fire today. Investors, though, waiting for a bevy of earnings. Yields are down, so is oil a bit. But the big test tomorrow, when Meta reports earnings, so is the market, Kelly, AI, okay?

Kelly Evans (1:25)

We'll ask. We're also watching jets and the high seas. Fuel costs are testing airline profits and passengers will feel the pinch. Ryanair's CEO warning that European fares could rise 20% next year. Delta already cut its outlook. More US carriers are reporting this week. Airlines for America CEO Chris Sununu joins us. And speaking of travel, Norwegian is betting big on luxury as they navigate softer bookings. Contessa Brewer takes us aboard Regent Seven Seas Splendor, they call it, where you can book a suite for 15 grand a night.

Brian Sullivan (1:56)

$15,000 a night?

Kelly Evans (1:58)

If that's how you want to spend it.

Brian Sullivan (2:01)

Is that the ship? Like, are you alone?

Kelly Evans (2:03)

Right.

Brian Sullivan (2:04)

Is it your ship for a day?

Kelly Evans (2:06)

And you don't even get the whole boat. Let's start with a tug of war on the tech trade we're seeing in the market right now. As you can see here, a handful of bullish notes on software and AI names on the street today. You also had a bullish one from Melias saying the tech concern will pass just like others have. But on the flip side, plenty of reasons to be concerned. Elise Group, a Korean AI services company, plummeted 30 percent in its public debut in South Korea. Credit default swaps have jumped for CoreWeave and Oracle. All of that was before the morning. We got some names of the AI names that people were most worried about, and concern can be canaries in the coal mine. Take a look at CoreWeave, Oracle, Nebius Group, HUT8, and Applied Digital.

Brian Sullivan (2:45)

They're all catching bids today. So the question is, what do you do now? Right now, I'm going to talk louder as you cough Kelly, as the tech trade goes on. Yes, we need some water. Let's bring in MAI Capital Management Market Strategist, Chris Grisanti, and Defiance ETF Chief Financial Officer, Sylvia Jablonski. All I want to talk about is this $15,000 suite, but that's for Contessa later on in the show.

Sylvia, we had this, you know, don't want to make too much of it, but two week long kind of sell off semiconductors technology, some stocks down 50% from their highs. It's been more calm the last few days. How do we read it as we roll into the final two months of the year? Where are we in the markets right now?

Sylvia Jablonski (3:27)

Yeah, I think, you know, it's been a bit of a bumpy ride. We saw VIX spike about 41% or so on Friday, and a lot of investors became, you know, kind of fearful about what was going on in the market and what was going to happen with the tech and the AI trade. I think where we are now is in a great spot seasonally. So I think that tech and AI and a lot of the top names that we've been looking at are poised to continue to grow into the end of the year. We have this backdrop of inflation fears, geopolitics, other things like this, perhaps credit risk. But what we do know is that the demand for power and energy and AI and compute is not falling just because some of the stock prices have fallen over the last couple of days.

Brian Sullivan (4:06)

But that doesn't mean demand for stocks though. The demand for energy is up.