Josh Schafer on Nasdaq Momentum, AI Capex, and the Case for Intel

The market's recent surge to record highs—driven by a 30% rally in hardware ETFs and a sharp rebound in AI infrastructure stocks—has investors reevaluating the sustainability of the current momentum. Josh Schafer of Barron's Investor Circle argues that the rally isn't just about short-term sentiment but reflects a long-term hardware buildout, with chipmakers and AI infrastructure companies leading the charge. While software stocks like ServiceNow have seen sharp pullbacks amid 'SaaSpocalypse' fears, larger, more entrenched players like Microsoft and Oracle are weathering the storm due to their dominant market positions. Intel, despite a 220% rally over the past year and a 200% surge in just weeks, remains a speculative bet—its stock still trading below all-time highs and with earnings expectations not yet reflecting a turnaround. Schafer warns that while the market is pricing in a quick end to geopolitical conflict, the real test lies in whether fundamentals, especially Intel’s upcoming earnings, can justify the FOMO-driven run. The key insight? In a 'risk-on' environment, the most promising opportunities aren’t in the obvious winners—but in underappreciated names with room for upside surprises. The episode reveals a market increasingly focused on physical infrastructure over software, with AI capital expenditure (CAPEX) now the dominant narrative. Investors are betting on the long arc of AI deployment, not immediate profits.