Rotation Nation, AI in the Classroom, and Betting’s Soccer Boost 7/6/26

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**Kelly Evans** (1:02)
Thank you very much, Scott. A jump in chip stocks is pushing the NASDAQ higher again today as we kick off the first full trading week of the second half of the year, while shares of Nike are weighing on the Dow, although it did briefly top 53,000 for the first time ever. I'm Kelly Evans, and welcome to The Exchange. Are we or aren't we seeing a leadership rotation? Scott Cronert and Jonathan Krinsky weigh in on that question as the SOX chip index jumps almost 4% today, coming off back to back losing weeks for the first time in four months. Plus, just as sentiment is shifting around jobs with prominent voices in Silicon Valley saying that AI disruption fears are overblown, Sal Khan is here to say, hold on, we still need to take those concerns seriously. That and how the betting boom on the World Cup is creating new winners and losers, including one key market in China. But let's begin with this herky jerky market, if I can call it that. The momentum trade coming off its worst two-day decline in six years, falling 17 percent according to Goldman and down 24 percent from its peak coming into today. They say buying that dip has typically paid off, and today we are seeing a bounce in areas like the chips. Let's dig into it with Scott Cronert, he's US equity strategist at Citi. Scott, it's great to see you and what do you make of it?

**Scott Cronert** (2:17)
Hey, Kelly, so like you're looking, I think the response to the sell-off that we've seen in the past couple of weeks is appropriate that's bound to happen at some point here on the mean reversion side. I think our issue and we have downgraded tech, we can change a go from a long-standing overweight to a market weight, and we're just allowing some room for digestion of the second quarter move that we saw particularly coming from the semiconductor component attack.

**Kelly Evans** (2:45)
Room for digestion, healthy development for you?

**Scott Cronert** (2:50)
I think it's probably healthy. I don't expect there will be any material change in the fundamental setups for these companies as pertains to 26 and maybe 27 earnings. But we do think that what we're doing as memory prices work higher, the stocks work higher off of the earnings expectations around that, is set up for a little bit of a game of chicken with hyperscalers where who's going to blink first in terms of how you justify paying more for semiconductor componentry relative to the ROI discussion on the other side of that. So we think it plays out through the Q2 reporting period. That's where you get your digestion, then you come back to the other side, presumably with a bit more balanced view towards tech into the end of the year.

**Kelly Evans** (3:35)
By the way, quite a move in the software space, and that's an area I know you guys think maybe has some more room to go.

**Scott Cronert** (3:42)
Yeah, so on software, we had been underweight for the past couple quarters. We've lifted that up to a market weight, and so there the spin is, we get it, we get it. Software has been ground zero for investors concerned where AI disruption is going to hit wholeheartedly. And we think that you've adjusted the terminal multiples appropriately for that. So what you end up getting here is that if there is some pushback on the capex spend out of the hyperscalers, that actually transmits into a little bit more confidence that the software fundamentals can remain persistent for longer. And that justifies their move higher in recent days.

**Kelly Evans** (4:21)
I think it's interesting that of everybody on the street, you guys I believe are the highest for your earnings estimate for the S&P 500 up at $350. What all goes into that?