Evercore ISI’s Julian Emanuel thinks Nvidia’s massive rally is creating fear of missing out in the market.
They found that clients, including many who traded during the dot-com boom and subsequent collapse, are more concerned about being underinvested right now than being overexposed.
“This is the first time for us since 2021,” the company’s senior managing director said on CNBC’s “Fast Money” on Monday. “It’s a bit of an alarm bell.”
In his Sunday note, Emanuel warned clients that similarities to Y2K are emerging, especially when it comes to speed. This time, he cites enthusiasm for artificial intelligence and the idea that the US will avoid a recession as key catalysts.
“Sentiment is very, very bullish. The bears have been wiped out,” he told CNBC’s Melissa Lee. “It’s time to think more about risk rather than reward until we calm down a bit.”
On Monday, the Dow closed at an all-time high of 38,797.38. The tech-heavy Nasdaq Composite is up 6% so far this year and is 2% off its record high.
Meanwhile, Nvidia, the global leader in artificial intelligence chips, is up 46% so far this year and 240% from last year.
Emanuel believes shares could decline 13% this year, which he considers normal during non-recession periods. “If you can’t see yourself being a buyer there, you should probably cheer up a little bit,” Emanuel said.
However, he has not completely ignored the winning growth trade.
“We’re on board in bits and pieces,” he said. “We like communications services. It’s been a great sector. We think it has defensive assets.”
Emanuel’s top picks also include consumer goods, health care and currency markets.
“At the end of the day, you’re still making 5% on cash,” he adds.
His S&P 500 year-end target is 4,750, which implies a loss of about 5% from Monday’s close.
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Source: www.cnbc.com
