‘BULLISH ON TECH’: Strategist explains why tech will DRIVE markets higher

LIZ: JUST OVER FOUR MINUTES AWAY AND, LISTEN, NVIDIA RELEASES ITS QUARTERLY NUMBERS TOMORROW. DON'T GET TOO EXCITED, YOU'VE GOT A WHILE BEFORE THAT. BUT WE ARE MINUTES AWAY FROM A SLEW OF OTHER TECH EARNINGS REPORTS. WE HEAR TODAY FROM BOX, ZOOM AND INTUITED. TECH OVERALL HAS BEEN A DOMINANT PLAYER OVER THE PAST YEAR, BUT WILL THESE EARNINGS DETERMINE WHERE THE SECTOR TO GOES FROM HERE? JOINING ME NOW, CAN CANTOR CHIEF EQUITY AND MACRO STRATEGIST ERIC JOHNSTON. ERIC, WHERE ARE YOU ON TECH RIGHT NOW? >> SO WE'RE QUITE BULLISH ON TECH. WE ACTUALLY THINK TECH IS GOING TO LEAD US HIGHER. SO FOR MUCH OF THIS YEAR THERE'S BEEN A NEGATIVE CORRELATION BETWEEN THE HYPERSCALERS AND THOSE THAT SELL TO THE HYPERSCALERS, THE A.I. INFRASTRUCTURE NAMES. WE THINK THAT CORRELATION'S ACTUALLY GOING TO TURN POSITIVE, AND THEY COULD BOTH WORK HIGHER TOGETHER. THERE'S BEEN SOMEWHAT OF AN INFLECTION POINT WITH THE HYPERSCALERS WHERE THEY'RE STARTING TO SHOW THE ROI, THEY'RE STARTING TO SPEAK TOWARD THE ROI ON ALL THE CAPEX, THEIR MARGINS ARE EXPANDING, AND THE PRICE OF COMPUTE IS GOING HIGHER. SO WE THINK THAT GROUP CAN WORK, AND THEN THE A.I. INFRASTRUCTURE NAMES HAVE REALLY BEEN DERISKED BY THE MARKET. THAT THAT'S BEEN THE NEGATIVE MOMENTUM TRADE THAT'S TO GONE ON. AND THEIR FUNDAMENTALS ARE QUITE STRONG WHERE EARNINGS ESTIMATES THERE ARE STILL RIPPING HIGHER. SO I THINK, YOU KNOW, THEY CAN BOTH WORK TOGETHER, AND THAT'S GOING TO BE MUCH OF THE MARKET AND REALLY DRIVE US HIGHER. LIZ: THE NEGATIVE CORRELATION BETWEEN THOSE THAT SUPPLY AND SELL TO THE HYPERSCALERS? THAT -- AM I WRONG -- IS THAT S IS MCI, SUPER MICRO? THEY ARE PRETTY MUCH AT THE SO MUCH THE S&P 500ED THE TODAY, SECOND BEHIND MERCK OR MOWER THE NAP. BUT GIVE ME A -- MODERNA. GIVE ME A SENSE WHY YOU THINK THAT'S THE AREA SHAH THAT'S SOMETHING TO REALLY WATCH. >> THEY'RE BENEFITING FROM THIS SURGE IN CAPEX. IF YOU LOOK AT THE NUMBER FROM THE HYPERSCALERS, TALKING ABOUT $750 BILLION, AND THAT'S LIKELY TO GO TO $1.2 TRILLION OR HIGHER IN 2027. SO THIS, YOU KNOW, THE EARNINGS GROWTH THAT THEY'RE SEEING THIS YEAR WHICH HAS BEEN PRETTY STAGGERING IS GOING TO CONTINUE INTO NEXT YEAR. AND THAT'S THE SEMICONDUCTOR NAMES, IT'S, YOU KNOW, NEOCLOUDS, IT'S ANYONE FROM CATERPILLAR, ANYONE WHO'S SELLING INTO THAT, INTO THAT CAPEX CYCLE IS BENEFITING. AND WE SEE THAT COPPING. THE EARNINGS -- CONTINUING EARNINGS ESTIMATES REVISION HAVE MORE TO GO. LIZ: WHAT DOES THE MARKET NEED TO HEAR FROM NVIDIA? THE STOCK HAS NOT PERFORMED THAT GREAT AFTER EARNINGS REPORTS OVER THE PAST SEVERAL QUARTERS. >> IT HASN'T. YOU KNOW, THE BIG CONCERN IS NOT NECESSARILY WHAT'S HAPPENING NOW OR WHAT'S GOING TO HAPPEN IN TWO QUARTERS. THE MARKET'S REALLY QUESTIONING WHAT DOES IT LOOK LIKE IN, YOU KNOW, ONE, TWO AND THREE YEARS FROM NOW. AND THIS IS NOT JUST FOR NVIDIA, BUT FOR ALL THE SEMICONDUCTORS. IS THERE GOING TO BE SOME SORT OF A CLIFF DOWN THE ROAD. SO I THINK ADDRESSING THE LONGER TERM PATH AND WHY THAT, YOU KNOW, ESSENTIALLY IS NOT GOING TO HAPPEN, I THINK, IS KEY. AND A LOT OF THAT IS AROUND THE BUILDOUT BEING NOT JUST WHAT WE'RE SEEING NOW, BUT IN OTHER PRODUCT AREAS WHETHER IT BE, YOU KNOW, ROBOTICS OR OTHER TECHNOLOGIES. SO I THINK THAT, TALKING ABOUT THAT -- LIZ: ERIC JOHN