A senior portfolio manager at Morgan Stanley Investment Management says one of the most compelling investment opportunities in years is sitting in plain sight, and that Wall Street’s obsession with short-term metrics is causing most investors to miss it entirely.
In a new CNBC interview, Andrew Slimmon says the disconnect between how Wall Street and Silicon Valley are interpreting AI capital expenditure is creating exactly the kind of mispricing that long-term investors should be exploiting.
“This is a classic battle between Wall Street’s focus on short-termism and companies that are willing to invest for the long term. Wall Street is saying, ‘Oh, these big guys, they’re spending a lot of money. Their free cash is going down.’ And you have the smartest guys in Silicon Valley saying, ‘This is going to enhance return. We are going to generate revenue.’ And you saw the CEO of Amazon say, ‘This is going to be very bullish for long-term growth.'”
Slimmon says that the gap between Wall Street’s skepticism and Silicon Valley’s conviction is precisely what creates the opportunity, and that the window to act is now, before the results of those investments become apparent.
“That’s the battle that’s going on. It’s not apparent to Wall Street yet, but these companies are making the investments. So I think there’s a big fat pitch here of investing in these companies now when the CapEx numbers haven’t produced the results yet.”
Slimmon also explains why he believes the market is unlikely to see a significant decline from here, pointing to investor behavior shaped by the painful lesson of last year’s sell-off.
“Muscle memory is really important. Last year, a lot of people pivoted, turned negative and sold stocks. This year, people said, ‘I don’t want to make that mistake again.’ Too many people have egg on their faces by pivoting last year to see a real pivot.”
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.