How Chip Stocks Became Wall Street’s Favorite AI Bet (ft. Jason Ware)

**SPEAKER_1** (0:00)
Welcome back to The Rundown, interview edition. Today, I am talking to Jason Ware, the Chief Investment Officer at Albion Financial. Jason is one of my favorite people to talk to. This is his third time on the show. And in today's conversation, we looked back at Q2 and why chip stocks like Micron went parabolic, why Max 7 stocks continue to struggle, and what Jason is watching for as we enter earnings season. Jason also gave his thoughts on the Fed and why he doesn't think that we'll see any rate hikes this year. This was a really great conversation. I think you guys are gonna really enjoy it. So let's get into it. All right, guys, today we are talking to Jason Ware, Chief Investment Officer at Albion.
This is Jason's third time back on The Rundown. He's one of my favorite people to talk to. Jason, welcome back.

**Jason Ware** (0:48)
Hey, thanks for having me. It's good to be here. Appreciate you having me back. I always enjoy this.

**SPEAKER_1** (0:52)
Of course, we do this every quarter at this point. So I wanna kind of look back at when you came on last time, which was early April.
And back then, the markets were just a total mess. We were just at the middle of the Iran War. Oil prices were surging. Software stocks were selling off. And then the market bounced back pretty quickly for Q2. We had the best quarter since 2020, I believe. Were you surprised to see the market bounce back so quickly last quarter?

**Jason Ware** (1:22)
You know, not really. I think we talked about this. Because like you said, it was early April, so we were kind of in the throes of the war in the Middle East. And I think we had talked about the idea that oftentimes these corrections are very symmetrical in terms of their shape, like a V-recovery.
And I believe that we discussed, and I should have watched the last interview before we did this one, just so I can make sure I'm like-

**SPEAKER_1** (1:50)
No, you're 100% right.

**Jason Ware** (1:51)
In terms of what I said. Yeah, I think we talked about the idea that it would likely be short-lived, that you don't follow the developments of the war, but instead pay attention to oil prices, and that stocks would likely bounce back fairly quickly, because our view was that there was gonna be some type of off-ramp here, that oil would settle down, and then at the end of the day, earnings would be the biggest story of the quarter. And of course, all of those things proved to be true. And so I wouldn't say that I was surprised by what happened. I would say that it was expected. It's hard to time these things precisely, but overall, it sort of went the way that I think we discussed.

**SPEAKER_1** (2:29)
Yeah, and you kind of made the similarities to the tariff freakout we had last year, right? Where the markets tanked and they bounced back. So it kind of did play out that way. The earnings story did dominate. And the other big storyline in Q2 was, of course, the chip rally, right? And the semiconductor stocks were just going crazy.
You know, Micron, SK Hynex became household names. What did you make of the chip surge? And more importantly, like the fact that the MAX 7 stock, which were the hottest thing last year, kind of got left behind, and everyone's just running into these memory and chip names.

**Jason Ware** (3:07)
I mean, I think it's a natural rotation within what overall has been a healthy bull market. If you take a step back, obviously, like we've come a long way from the pandemic lows, March 23rd of 2020
We had a bear market in 22, and then we kind of had a reset of the bull market, which I think sort of began in the early part of the decade, like I said, post-COVID.
And so I think the last three-ish years of the bull market, three and a half years, have largely been a story of tech leadership, of AI excitement, but also at times, periods of internal rotation. I mean, I can't, I've lost count how many times I've heard strategists and portfolio managers talking about the rally or the bull market broadening out, quote unquote broadening out. It feels like we see that for a couple of months, and then we see it fade, and we see tech leadership reassert dominance. And I think in particular, to your point this year, what we've seen is, you know, tech has done largely quite well, but I think the big driver of that performance, both in terms of earnings and stock price, has been what's happening in semiconductors. When we look at Q2, I would say that Mag-7 actually did okay. As a group, it was up 11% in the quarter. The S&P was up 14 and some change off of the lows in March. But semiconductors were, you know, up almost doubled, like 95%. And so there's definitely been this move into what I call AI bottleneck plays and away from the more obvious hyperscaler, you know, compute story that drove chips like Nvidia, the big GPU winner in the space. We've seen kind of a move away from what was obvious to some of the pain points in the AI infrastructure build out.