Big tech earnings will be bifurcated, says Alger's Ankur Crawford

My next guest believes this earnings season will come down to the haves and the have nots. Joining me here at post 9 to explain is Algers. Ankur, Crawford. Welcome back. Nice to be here. Who are the haves? The obvious ones? The mega cap tech games. Well, not all mega cap tech. So I would say last time we were on, we talked about a mag four. I think we’re still there. We have this mag four and a bifurcation in our our magnificent 7. Google has caught up a little bit, but we still think that you know the existential risk to search is something that’s not going away. So as you’re less bullish that name relative to the others, relative to Microsoft, NVIDIA meta and well, because I because earlier you know we were having this conversation about this new announcement from meta today and its partnership with Alphabet and I read that stat, you go back over the last 12 months say well Alphabet’s up 50%, Microsoft’s up 40%. So maybe the narrative that developed was exaggerated and people were writing that company and that stock off too soon. Maybe that could be, but they have to look, I believe that Google can produce some sort of AI capability that is astounding, but so can a lot of other people. They’re going from a market where they were effectively oligopoly perhaps in the in the digital advertising market to a market that is much more fragmented. And and I have, I just have a a rule of thumb, I won’t buy market share losers in part because it when you start losing market share there’s a lot of negative things that start happening to the business model even when your market share is so incredibly elevated that losing a couple points of market share is not necessarily going to make a a huge difference. Well, I I think once you start losing market share, you don’t lose just a couple points of market share. And an example is I use perplexity AI every single day. It has changed the way I search and this is just the beginning of the changing way we’re going to search on a on a go forward basis. So perplexity has nothing to do with Google and and the more people I tell about perplexity that use it, the more love using it and come off of Google. I just think it’s complicated, OK. Do do you feel like because of the increased volatility now and the backup in rates that now these tech earnings which start next week have that elevated importance that we’ve been debating for seemingly forever? Oh, for sure. But I do think it’s a bit of a blessing for the market and for the stocks that they have come in as they have into earnings. And in part because like we were just talk about TSM, you know TSM was had run into earnings very strong expectations. They come in, you know the numbers don’t change that much. You know find a little bit of margin because of power they gave up and and a little bit of squishiness on the industrial side. But the story is really about how they’re ramping in AI and they are the vendor that will provide everyone a chip. It trades at a 25% discount to the market. It’s down 4%. That’s OK because it’s it’s at a relative discount that is unwarranted. So let’s talk about the market at large. We’re down to, you say 4% for TSM, S&P is about 4% or so off of, off of its high. I hope you heard the conversation we just had with Rick Reeder who said the equity market’s going higher and now I’m paraphrasing, that was a direct quote that the market’s making too much of this back up in rates and it’s still going higher because equities can move up even if rates remain at this level. You agree? I think again, it’s going to be a bit of a bifurcation. So higher rates have implications for the economy, economically sensitive stocks. We saw this broadening of the market over the last month, month and a half where everyone like small caps and everything started to rally before the backup and rates before the backup and rates rates back up. It means choppier waters. It means you go back to the secular growth. And so I think that’s what’s going to start to happen as rates go up and until we see what happens in the economy and the impact it will have in the economy, you get a narrowing of the market LED again by kind of secular growth which is today it’s AII mean. Where it will affect is biotechs, you know groups like biotechs which are long duration assets that don’t have that you know implicit secular growth that’s here and now they probably suffer more than tech. So we’re back to where we were. We’re back to where you’re not a believer today in the broadening trade so much as a result of what’s happened with with rates and especially if rates stay where they are or even as some firms are suggesting you know 10 year goes to 5%. And as Rick said, I mean that that could happen at any time now. It’s not like we’re that far. No, I think I think the 10 year goes to 5%. I actually think it’s really bullish to be completely frank that the that the economy is as resilient as it is as when the Fed has normalized A2 decade long hiatus on ridiculous rates and and our economy is still resilient and the consumer is still showing this resilience. I think it’s quite bullish for for our economy because now we have a lever when we do need it the Fed can react. I I I personally thought that if they did cut the market would would go down anytime this spring. So I’m I’m actually quite pleased that they’re not going to cut. All right we’ll we’ll make that the last word. Enjoy our conversation as always.

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