Company Interview / How AI is impacting these legacy tech stocks

Key Takeaways:

Metals corrected sharply after a parabolic move, with gold favoured for defensive positioningMiddle East tensions could drive gains in gold and crude, but resolution may pressure these assetsSoftware stocks seen as unfairly punished amid AI-related fears, with a potential comeback anticipatedMajor tech firms like Alphabet (NASDAQ:GOOGL), $AMD, and $MSFT under investor scrutiny over AI spending and returns

Ira Epstein highlights the recent volatility in metals, noting that while there was a strong start to the year with a significant surge, metals have since corrected by 20-30%. Epstein points out a distinction between software companies and AI technology, stating that software remains necessary even as AI evolves. He suggests the market may be incorrectly penalising software names due to AI disruption fears, and observes a widening gap between semiconductor and software stocks, hinting at a potential reconciliation.

Geopolitical risk in the Middle East receives attention, with Epstein asserting that tensions involving Iran and the US could buoy both gold and crude oil prices. He identifies gold as the preferred metal in the current environment, recommending call options over futures to manage risk. Epstein makes clear that while copper has participated in rallies, it lacks the defensive attributes of gold in a crisis. Both gold and energy markets are likely beneficiaries if hostilities escalate, while any surprise resolution between the US and Iran could pressure these assets.

In technology, Epstein spotlights capex trends at Alphabet (NASDAQ:GOOGL), and notes that large tech companies face scrutiny over the ability to generate returns from significant AI investments. He observes that $AMD and $MSFT have experienced share price declines despite strong fundamentals or market positioning, suggesting opportunities for investors seeking value.