Hedge fund manager Daniels believes this week’s sell-off in technology stocks is confirmation that the industry is in serious trouble. Niles believes the market’s reaction to Google parent Alphabet’s quarterly results shows investors are running out of patience. Shares fell 5% on Wednesday. “The way the market is reacting to Google tells me that people are finally starting to realize, ‘Yes, at some point we want to see revenue from all this (artificial intelligence) spending,'” said Niles Investment Management, founder and investor the portfolio manager told CNBC’s “Fast Money” on Wednesday. On July 11, Niles warned on X that earnings season could expose huge risks in Big Tech. He’s particularly worried about seven stocks, including Tesla, Nvidia, Alphabet, Meta Platforms, Microsoft, Apple and Amazon. The index fell nearly 6% on Wednesday. One of the biggest losers is Nvidia. Shares of the major semiconductor company fell nearly 7% on Wednesday. It is scheduled to report quarterly results on August 28. We haven’t seen anything like this in years of accumulation,” Niles said. “Right now, I’m actually wondering if we’re going to see a decline in quarterly results sometime next year as these big tech companies acknowledge that they may be overbuilding right now.” Niles, a former Wall Street semiconductor and computer hardware analyst, also sees China Risks from bubbles. “If you say, is there a bubble because China is over-ordering everything on the planet before we can possibly change the government 100 percent. That’s a rational thing for China to do,” Niles added. “And if you look at some of the (capital) equipment companies that are reporting, you’ll see China’s revenue is close to 50%. So, sometime next year, there’s going to be a horrific decline in capital equipment revenue. Because of this.” Nye There aren’t enough shortcomings in the field to warrant increased exposure, said Erls. “On the short side, we closed one of our Mag 7 shorts today and it got crushed,” he said. “But overall, we’re still more focused on the shorts.” Longer term, Niles thinks the bull case for big tech stocks remains intact. “I think we’ve got a lot of years before this reaches a sustained peak or whatever you want to call it,” Niles said. “So, you have to go through that period, just like you did with Cisco stock price A 4,000% rise followed three terrible declines. “Revelation: Owns Apple, Nvidia, Amazon. Disclaimer
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