The Earnings Season That Could Make or Break the AI Trade (ft. Hardika Singh)

**Zaid** (0:00)
Welcome back to The Rundown, interview edition. Today, we are talking to Hardika Singh, an economic strategist at Fundstrat, which is one of the most followed research shops on Wall Street. We covered a lot in today's conversation, including why investors are feeling bored, even though the markets are sitting near all time highs, whether a 24% earnings growth is setting the bar too high, if big tech will finally tap the brakes on AI spending, and why Hardika thinks the Fed will be paying more attention to the job market than inflation moving forward. This was an awesome conversation. I think you guys are gonna really enjoy it. So let's get into it. All right, guys, today we are talking to Hardika Singh, the economic strategist at Fundstrat. Hardika, welcome to The Rundown.

**Hardika Singh** (0:45)
Thank you so much for having me. It's great to be here.

**Zaid** (0:48)
I'm super excited for today's conversation. There's a lot going on in the markets right now. The markets are kind of in a weird spot. So I wanna start with something that you wrote in your recent newsletter, titled, can earnings season revive a lethargic stock market?
I'm just curious, why do you think the stock market feels so lethargic right now? I mean, we're still near all time highs. The S&P is up 10% on the year, but everyone seems kind of bored. Why do you think that is?

**Hardika Singh** (1:16)
I think it's because the names that everybody was in, such as Micron, Sandisk, AMD, they haven't really been doing all that well recently.
It's been names that very few people were in, such as Financials, Industrials, Healthcare. And these are not really stocks that you associate with, oh, this will help me become a millionaire or whatever.
And I think the hotter stocks being down has really hurt sentiment in the stock market. And that's why even though there's plenty going on underneath the surface, it just feels very lethargic. It feels slow. It doesn't feel exciting. It feels exciting when your Micron's up 30% or 20% in a day, right? It's a completely different story when Goldman Sachs is up.

**Zaid** (2:00)
So it's like the sexy names aren't performing right now. And like no one really cares that Goldman Sachs is making record highs or even Apple is making record highs. They want to see the Sandisk and the Microns of the world just rip higher.

**Hardika Singh** (2:13)
Exactly. And again, it goes back to just the promise they've had over the past year.
The gates they've posted, they will have you salivating at the mouth and regret not getting into memory, thinking it was over hyped earlier on in the year. And now that it's coming down, I think people who had been asking for a broader diversified rally, they've been proven right. But at the same time, it's not a victory that feels good.

**Zaid** (2:40)
Well, I mean, how do you think that earnings will change that? I mean, even if we're seeing some strong numbers already, the banks have reported they all crushed it and financial sectors are hitting record highs. Even if we do get a strong earnings, I mean, is that going to help these memory names?

**Hardika Singh** (2:56)
Traditionally, it has. I think some of the sell-off that we've seen, it's normal, because the only catalyst that we've seen in the market has been the renewal of fighting in recent weeks, right? So that's not good. We have seen oil prices inch higher again. Yields are starting to go up a little bit again. And that, again, is not a good thing if you're a memory stock, which is so dependent on these other external factors as well. These are beta plays.
So I think that earning season really gives them a chance to prove their worth again and show that we still have a bottleneck here. We still are making, not just making, but printing money. We're printing money here. There's going to be a shortage and we don't see demands of siding. And I think that's what we saw when we got Micron's earnings some weeks ago.
Earnings were amazing. But I think the stock still got hit because the overall sentiment for semiconductors was so poor.
I do think that a lot of that sell-off was just detached from reality. We didn't, I didn't really see a reason for it because every single thing that Micron said was good. Everything that they said about signing long-term contracts, sort of backing up the belief that AI is the fourth industrial revolution. These were all points that I liked. But again, the stock did really good one day and the next day it flopped.