Latest news with #Emons
Axios
4 days ago
- Business
- Axios
What the OpenAI valuation means for stock investors
OpenAI is in early talks to sell employee shares at a $500 billion valuation, Axios' Dan Primack reports. Why it matters: Amid calls of a market bubble, the lofty valuation provides justification for sky-high AI stock prices. Driving the news: OpenAI is weighing a secondary stock sale, Primack says, as first reported by Bloomberg. The deal would increase its valuation by nearly two-thirds. The tech company's previous valuation was $300 billion. What they're saying: "This is an AI Revolution, and OpenAI is the golden child," Wedbush Securities analyst Dan Ives tells Axios. The valuation for OpenAI could "hit a trillion," according to a note from Ben Emons, chief investment officer and founder at FedWatch Advisors. That could drive growth in sectors like semiconductors and chips. Zoom out: The OpenAI valuation mirrors companies with exposure to AI driving the market. Fewer stocks are trading above their 200-day moving averages, and the number of stocks climbing versus declining is decreasing, Emons notes. That means a smaller number of stocks that are already expensive are driving the broader market, which leads to concentration concerns. However, if valuations are justified by earnings growth, then investors are right to be getting in, regardless of the elevated prices. Zoom in: Emons highlights more baskets of stocks with AI exposure are outperforming the Magnificent 7. That could indicate investor appetite for lesser-known AI plays like S.K. Hynix (up 50% this year) or Vertiv (up 17% this year), as the Magnificent 7 stocks become more expensive and aren't performing as well on a year-to-date return basis. As Axios Markets has reported, the AI supercycle ETF is up 23% year-to-date, versus the Magnificent 7 gaining 6.2% in the same timeframe. Yes, but: The OpenAI valuation could justify the prices of Magnificent 7 stocks with heavy AI exposure. Be smart: Tech stocks are historically overvalued at the beginning of a technological supercycle. If you worried about valuations, you would have missed every tech rally in history, according to Ives. The intrigue: OpenAI's employee stock sale also points to the increasingly delayed IPO process for startups. Employees used to stick around for a firm to go public. But that's taking longer and longer, and companies like OpenAI are finding new ways to reward employees in the interim.
CNBC
04-06-2025
- Business
- CNBC
A cybersecurity stock to play the AI trend, and why U.S. exceptionalism in markets isn't over
(This is a wrap-up of the key money moving discussions on CNBC's "Worldwide Exchange" exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors on Wednesday are looking at cybersecurity stocks as a way to play the next phase of the artificial intelligence trade. Plus, one investors breaks down his bond market forecast as hopes for Federal Reserve rate cuts in 2025 grow. Worldwide Exchange Pick: Cloudflare Sevasti Balafas, CEO Goalvest Advisory sees Cloudflare as a broader way to play the AI an tech trade. "A big part of the reason that we like them is that 80% of their revenue is stable subscriptions based and secure," said Balafas. "They are a broad platform it's not just cybersecurity that they are focusing on, they make our websites faster and more secure but it's not just security. They have a broader platform that we like. " Cloudflare shares are more than 60% higher year to date. The stock also makes up 5% of the Amplify Cybersecurity ETF (HACK) and 4% of the First Trust Nasdaq Cybersecurity ETF (CIBR) . Both funds are trading near all-time highs this week. Fed impact on the bond market With fed funds futures pricing in as many as two rate cuts in 2025, Ben Emons of FedWatch Advisors is seeing dovish signs. "The Fed has room, but the timing seems to be challenged because of the uncertainty ... I think the Fed is in a position to cut and will likely follow through," said Emons. But Emons believes rates will also stimulate the economy enough to significantly boost yields. "Yields should go higher from here as opposed to lower at least at the initial phase. I think we are going to test close to 5% (yield) on the 10-year simply because the economy is picking up," he said. Global market view from the SuperReturn Conference Julian Salisbury, co-CIO of Sixth Street Capital, shared his view of the global markets and U.S. exceptionalism. "I don't think the U.S. exceptionalism story is done; it's still the best investible market in the world," said Salisbury. "A lot of people are starting to say I have kind of gotten overweight just given the outperformance of my U.S. assets over the last five-to-10 years and maybe there is a chance to rebalance."
