Haworth sees chip pullback as AI repositioning opportunity

Rob Haworth, a senior investment strategist at U.S. Bank, stated that the recent decline in semiconductor stocks may represent a buying opportunity for investors who are underweight in artificial intelligence. Speaking on Market Domination Overtime, Haworth suggested that market participants are using the weakness to rebuild their positions and regain exposure to the AI trade. He noted that while the sell-off in CoreWeave raises concerns about debt becoming a larger burden, current debt costs are not out of hand. Haworth pointed to option-adjusted spreads on high-yield bonds, specifically single B, double B, and triple B issues, which remain well contained. He added that with the S&P 500 not far from all-time highs, opportunities to rebuild positions in important AI names are limited, making the current pullback a potential entry point for those seeking to adjust their portfolios.

Haworth also addressed comments made by Dan Sforza of Yahoo Finance regarding Nvidia CEO Jensen Huang. Sforza noted that Huang eased investor fears, which coincided with a reversal in CoreWeave's stock price. Despite this, investors remain wary of Nvidia's large deals with various companies and the associated fear of circular financing. When asked about Huang's role in these market dynamics, Haworth emphasized that while Nvidia is important, the broader chip ecosystem is even more significant. He observed that investors have been overinvested in semiconductors and have recently tempered their enthusiasm.

Haworth argued that the AI infrastructure build-out requires more than just chips and large language models. The trade extends to power, infrastructure, utilities, and industrial companies necessary to build cooling centers and fund data centers. He noted that the sector also includes cybersecurity components required for this infrastructure development. This broader perspective suggests that the AI investment theme is not limited to the major semiconductor names currently dominating headlines.