Big Tech Selloff May Signal Turning Point

0:00Adobe is turning AI promise into marketing reality. A reality where personalization feels more human, automation feels authentic, and customers feel more connected to your brand. From AI frenzy to ROI, it starts with Adobe. Small businesses are the pulse of every community. They bring people together, create opportunities, and drive growth. Chase for Business helps business owners like you with personalized guidance and convenient digital tools all in one place. With that guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn more at chase.com slash business.

0:39Chase for business, make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank, NA, member FDIC. Copyright 2026, JPMorgan Chase and Company. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.

1:22Let's create smarter business, IBM. Bloomberg Audio Studios. Podcasts, radio, news.

1:56at nine basis points. We also did see stocks move off their lows of the session when Fed Chair Jay Powell was speaking. The Nasdaq 100 right now up close to two-tenths of one percent. The S &P 500 intraday up four-tenths of one percent. The S &P was flat going into this and the Nasdaq 100 was ever so slightly lower. I want to bring in Bloomberg's international economics and policy correspondent Mike McKee. Mike, apart from no selfies with Jay Powell, which seems like a relatively good rule when you are someone like Jay Powell. I want to hear about the big takeaway from this. It really seems like supply shocks have, the Fed has little control when it comes to supply shocks, such as the one we're seeing right now in oil.

2:39Is that the big takeaway from him speaking earlier today? Yeah, if there is a takeaway, it would be that the Fed doesn't know what's going to happen because it does have this supply shock that's going to weigh on the inflation rate, it could also, if the inflation rate stays up for a while, weigh on demand. So the Fed is, as Powell repeated several times, well positioned to sit and wait for a while. Now, if you look at Fed Funds Futures, they traded the opposite of where they've been during Powell's comments. They now price in some cuts. I'm not sure that's the right reading of this. I don't think the Fed knows yet where they're going to go, except that they're going to be on hold for a while.

3:22He noted risks to both sides, to growth and employment and as well to inflation, but expressed confidence the Fed will get inflation down to 2 % at some point. Tariffs have a one-time impact on inflation. He said inflation expectations remain well anchored. The FOMC will reach its 2 % inflation goal, and the Fed's tools have no meaningful effect on supply shocks. That doesn't necessarily mean, though, Mike, that we will not see and are not seeing an inflationary effect from this more than month-long conflict in Iran. What can the Fed do or what will the Fed do if we do see inflation flow through as a result?

4:00Well, it depends on what areas inflation flows into. If it's oil prices, gasoline prices, those are things that the Fed can't do much about. If it starts to get into the broader economy, which it will in the sense that higher diesel prices are going to mean it's going to cost more for your package to be delivered, that sort of thing, and for trucks to resupply the rest of the country. If it starts to get into other areas of the economy, they might think about a rate increase, but they'll probably do more jawboning than anything else because they feel that at some point the strait will open, the oil will flow again, and it may take a while, but inflation will come down.

4:42And he made the point that if the Fed raises rates now, the effects are long and variable and could take us a year or more to start to hit the economy. And the economy might be in a totally different situation by then. And the Fed rate move wouldn't be good news. So the Fed is going to be very, very cautious about what they're going to do going forward, because mostly they think this is going to be about oil prices. And they just have to keep an eye on the rest of the economy. Bloomberg TV and radio, international economics and policy correspondent Mike McKee. Mike, thanks so much. Well, there's higher energy prices in focus.

5:19The war in Iran officially enters its second month. Treasury Secretary Scott Besson indicated some optimism about a reopening of the Strait of Hormuz, but that's as President Trump renewed threats against Iran if a deal isn't made soon. Let's bring in Bloomberg Balance of Power co-host Kayleigh Lyons to break it all down. Kayleigh, the president said the U.S. is in, quote, serious discussions with a new regime in Iran, An Iranian official earlier said there haven't been any direct talks. Do we know who is talking to whom right now? Well, that's a major question, Tim. Whatever talks are happening are through intermediaries.

5:51You have the likes of Egypt, Pakistan, Turkey all meeting this weekend as they seek an end to this conflict, though representatives from the U.S. and Iran were not at that table. And as you say, Iran contends that they are not talking directly with Washington, having rejected the 15-point ceasefire plan in public that President Trump told reporters aboard Air Force One last night that Iranians had accepted most of those 15 points, though we didn't specify which ones. There's a bit of a he said, she said situation here when it comes to the U.S. and Iran. It also is a bit of a good cop, bad cop situation to him, except frankly, President Trump seems to be playing both of those roles.

6:22On the one hand, he is citing good progress in negotiations he says are happening. On the other hand, he's taking to true social and threatening Iranian infrastructure, the energy infrastructure, oil wells, Karga Island. He said all of these things, even water infrastructure through desalination plants could be targeted. according to the president, if the Strait of Hormuz is not open for business, which, of course, right now it is not. So the escalation risk is certainly there, especially considering thousands more American service members have arrived in the theater. Of course, you had thousands of Marines and sailors aboard an amphibious assault ship.

6:54You have more Marines and Army paratroopers that have been ordered there. And you have reports in the likes of the Wall Street Journal and the Washington Post that the president is seriously considering putting troops on the ground in some form. The Wall Street Journal talking about the idea of seizing enriched uranium, something that would likely require ground forces and take some time. You also had the president telling the Financial Times that he would like to take Iran's oil, something that could involve the seizure of Karg Island, which is also something that is likely to need ground forces.

7:23Then the other escalatory thing we have to keep an eye on here is, of course, the Iranian proxies, the Houthis, who over the weekend launched attacks, missiles and drones at Israel specifically. remember how disruptive the Houthis were in the Red Sea beginning back in 2023, very disruptive to commercial shipping. So that poses a threat to the alternate route through the Red Sea that other Gulf nations like the Saudis are using to try to get their energy exports out. So there's escalatory risks at the same time, Tim, that the president is still talking about this diplomatic off-ramp. I guess, though, when you still have Iran saying that the claims the president is making around Iran accepting these points when Iranian officials are calling them excessive and illogical, it doesn't seem like we are necessarily getting any closer to concrete resolution here.

8:05Bloomberg's Kayleigh Lyons. More from her and Joe in the one o 'clock hour on A Balance of Power. Thanks so much, Kayleigh. Well, back to markets because the Nasdaq 100 has slipped into correction territory. The sell-off in big tech now flashing signals that have marked turning points in the past. Many on Wall Street now see the sector as a potential opportunity, pointing to oversold conditions and the likelihood of relief rallies, even amid uncertainty tied to the Iran war. For more, let's bring in Denise Chisholm, Fidelity's Director of Quantitative Market Strategy. Denise, in your view, is this a turning point?

8:37Is this a buying opportunity when it comes to tech? Yeah, when you look at the data, I mean, there's certainly concerns around the technology sector since it's been such dominant leadership in the markets. But it's interesting when you look at the mathematical setup. We saw this very, very briefly in the tariff tantrum last year. but the sector is now in the bottom third of its cheapest when you look back to the data since the 60s. And we haven't really been this cheap from a valuation perspective in over 10 years. And look, I mean, there's always the potential that it could be different this time or there's a value trap, but there is a very linear relationship between the cheaper this sector has been historically, the more likely it is to outperform.

9:1670 % odds are not 100 % odds, but the risk reward when you take a one-year time horizon, I can't say if the bottom is in right now, but when you take a longer-term time horizon, it does look more like an opportunity. Now, those 70 % odds are actually sticky even if things like operating margins decline or earnings revisions come down, which is kind of a mathematical way to say whatever it is that you're worried about might be partly priced in at this point. I think what people might be concerned about right now, Denise, is that this sell-off looks a little bit different if you peel back the layers of, you know, of quote-unquote tech, because there's this worry about AI and the idea that AI will lead to the demise of some in the software industry, the so-called SaaSpocalypse.

9:59Where are you seeing deals? Because just because we're seeing something is relatively cheap doesn't necessarily mean there's opportunity around the corner. Right, to your point in terms of a value trap. Now, look, I'll let the fundamental analysts tackle what will happen to software from a long-term perspective, But when I look at the data, you see something very rare historically. You have an industry that's never been more profitable, pinned to the 100th percentile of their profitability. And yet what we've seen over the last three months only has been a devaluation such that relative forward PEs are now in almost the bottom decile.

10:34So you have this massive disconnect between the valuation and the operating profit. That is rare historically. When you look back in all industries to the 60s, you only see this happen 2 % of the time. The instances that it happens are things like the financial crisis. So one of the ways that we can sort of tackle this quantitatively is to say, well, it is different, but we have seen a little bit of this movie before. In some ways, software is going through its own great financial crisis pricing. Now, how has that worked, historically speaking? Now, N is only 2%, so you can't draw broad conclusions, but we have seen this historically in technology sectors like communications, you know, comm equipment, and hardware, even though we haven't seen it in software.

11:19We've also seen it in semiconductors when you look back historically. And it's, you know, in some ways the odds from a go-forward perspective, once you're priced like this, what are your odds of outperformance over the course of the next 12 months, and what's your average outperformance over the next 12 months is, look, it's only 50-50, which is hard to say that that's a table-pounding buy. It's not. But it is to say that the average outperformance of all these sectors is around zero in the sense that they tend to be at the point where much is priced in and downside might be more or less limited.

11:51Denise, I do wonder. Yeah, go ahead. The technology sectors like semiconductors and common equipment have actually had higher odds of outperformance, which gets to a little bit of what Chair Powell was talking about, which is technology as a sector has a history of reinventing itself. And yes, there may be, in fact, bankruptcies within the software industry, but there might be companies that are actually coming in to create new products as well. I understand the urge to use history as a guide here, but I do wonder for those people who are out there who say, wait a second, we are on the verge of a new industrial revolution.

12:28We are seeing something with AI that we've never seen before in modern investing and in the modern economy. Do you have to throw the history textbook out the window or the markets history textbook out the window in an environment like this? Well, I'm always struck by the fact that it is always different this time, right? COVID was very different. Terrorists were very different. And yet the patterns are very sticky. I do think that there's always a knee-jerk reaction behind equity markets need to be reflective of very good times in the economy or no existential risk. But when you study history, you see over and over again that sometimes the market goes up and climbs the wall of worry, despite whatever you are worried about ending up coming to fruition.

13:10And I do think that what is the definition of this cycle when I look at the math is that the equity market has remained much more fearful on an ongoing basis than we see in most credit markets, which tend to be the smarter markets. You know, more you see that fear and that knee-jerk reaction, the more likely the market is to be higher, not to say over any three-month time horizon, but it is to say over any long-term time horizon. So yes, could it be different this time? But I think history shows you that those differences might end up being tailwinds that you don't suspect, like productivity, like higher GDP growth, like higher earnings growth, like more profitability in the overall market as well.

13:50I'm taking a look at WTI crude. It's up to$102 a barrel. Brent is at about$112 a barrel. To what extent are high energy prices a drag on the tech industry? On the tech industry, in some ways, you can think of it as a cyclical industry. So I think it's pro-cyclical in the sense that it's tied to the U.S. economy overall. I mean, energy prices are interesting in that I understand why the knee-jerk reaction is to look at real energy prices over time. And we've seen them spike in, you know, obviously 1980. And even the high in 2008 from a real inflation-adjusted perspective was nominally higher, was actually higher than the peak in 1980.

14:26So you draw those peaks and you say that there's real, very strong correlation to very uncomfortable economic situations. But it is quite different, right? History can show you what the similarities are and also the differences, which is to say that oil intensity has actually declined substantially in the overall economy. So that effect on the same price might actually have a much less impact than you think on the overall economy. And in some ways to think about it in very practical terms, instead of just oil prices, to think about the stress that it could impact on corporate profits, specifically when we're talking about equity prices, if you renormalize those oil prices in relation to corporate profits, you'd see that that spike in 1980 effectively was$1 ,000 in terms of the price per barrel that it would take to equate the same stress, which is not to say that higher energy prices don't take a bite off the U.S.

15:21consumer. They do. You see declines in real income growth, and especially over the short run, demand is relatively inelastic. But what you do see is I think that the comparisons to the 70s and 80s of stagflation, this is a very different economy and it might be much more absorbable than you think, which might mean, back to technology, that more of that is priced in than you may think. Okay, some really good historical context. Denise Chisholm of Fidelity Investments, thanks so much for joining us on Bloomberg Tech. Well, coming up, NASA is preparing to send astronauts back to lunar orbit for the first time since the 1970s.

15:54It's a critical milestone for broader U.S. space ambitions. We'll discuss that next. This is Bloomberg Tech.

16:07Effective marketing is smarter, not louder. Cutting-edge technology alone won't deliver better experiences or outcomes. Adobe helps marketers use data and AI to drive smarter engagement, reduce noise, and use AI effectively and responsibly. The brands winning in the AI era aren't the ones chasing every trend. They're the ones with the right systems and strategy. It's time to lead with insight, agility, and innovation. It starts with Adobe. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game.

16:51Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High-yield cash? Yes, again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Ad paid for by Public Holdings. Brokered services by Public Investing. member FINRA SIPC.

17:27Advisory services by public advisors, SEC registered advisor, crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go. Their broad range of Solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools.

18:08Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn more at chase.com slash business. Chase for business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. Some news in Elon Musk's world. A top judge in Delaware said she will no longer preside over a handful of lawsuits involving Musk and his companies and will reassign several Musk-related cases.

18:48This comes after the billionaire's lawyers alleged she had shown bias against him after she had ruled against him in high-profile cases. While NASA is sending astronauts back to the moon for the first time in over 50 years, the lunar flyby will test the Artemis II spacecraft, paving the way for a lunar landing in 2028. Let's get more on this historic mission from our reporter, Lauren Grush, at NASA's Kennedy Space Center. Lauren, good to have you on the program, especially joining us from Kennedy Space Center. I think if we think historically about the moon mission, when we did this 50 years ago, we were locked in this space race with the Soviet Union, a very different time now.

19:25Why spend so much money to go back to the moon? Well, I think it just depends on who you ask. You know, recently there has been a lot of concern brought up about the fact that China is also sending astronauts to the moon. And so you'll hear lawmakers and even, you know, NASA executives talk about the need to beat China to the moon. There's been concern that maybe they will get there first and kind of stake a claim to that area, preventing our exploration of it. But for more peaceful reasons, you know, there's a lot that NASA hopes to gain from the moon. For instance, there's this idea of jumpstarting a lunar economy.

20:06So finding ways to make money off the moon, possibly for an economy around the moon. And then, of course, it's learning how to live off of another planetary body that's no small feat. And eventually, you know, the goal is to get to Mars. And so learning to live off of the surface of the moon, those lessons can then be applied to Mars living someday. Lauren, how is this a test for NASA in an environment where there's, you know, significant investment in the private space industry, namely in a company like SpaceX, which is expected to IPO this year? What does this mean for NASA? What's at stake?

20:41The unique thing about Artemis is that it is kind of an amalgam of the old and the new, right? So they are using a lot of their long-term contractors like Boeing and Lockheed, which will be on display with this mission. And when it comes to landing on the moon, NASA has contracted and outsourced the lander development to newer players like SpaceX and Blue Origin. So it's actually kind of a mashup of the old and new way of doing business. And so it'll be a test to see if those companies can work together in this and these different contracting mechanisms can actually, you know, work together to put people back on the surface of the moon.

21:21Bloomberg's Lauren Grush, live at Kennedy Space Center. Thanks, Lauren. Check out her reporting and the entire team's reporting on the Bloomberg Terminal and at Bloomberg.com. More on space with the SpaceX IPO this time. That's next. This is Bloomberg Tech.

21:45Let's pivot now to the business of space as investors gear up for the highly anticipated mega IPO from SpaceX. Joseph Olagna is the founding partner of Buttonwood Funds. It's invested in the Elon Musk led company four times in the past year and a half. Joseph, good to have you on the program this morning. I want to start with a potential$1.75 trillion valuation at an IPO that raises a whopping$75 billion, which our team reported last week. Would this represent a satisfying valuation or exit for you at Buttonwood Fund? I don't know if we were to exit or not. I mean, we're about to go public in a few weeks, so I can't really talk about what we're doing going forward.

22:26But the$1.75 trillion IPO valuation was announced right after the merger with XAI. Before that, it was 1.5 at the end of last year before they talked about the merger. But no one's really talking about the addition of TeraFab yet and what that impact has. And I do think that that is going to be a game changer for SpaceX. Why do you think that'll be a game changer? Well, he really has the total ecosystem now with TeraFab. he no longer is going to be dependent on chips from NVIDIA. It might be one of the reasons why you're seeing NVIDIA stock act the way it is. Elon Musk is the type of guy that does not like to be dependent on other companies.

23:12Look what he did with Tesla, with the gigawatt factories. He didn't want to be buying batteries and be dependent to other companies. So it's the same playbook that I think he's doing right now with SpaceX and building a significant infrastructure play in space and artificial intelligence like no one's ever seen before. Okay, so that raises a really important question, Joseph. What are people investing in if they invest in SpaceX in the IPO? Are they investing in a near monopoly in space? Are they investing in an AI company, a telecoms company? Or is it Elon who they're investing in? Well, I always say it's Elon because there really is no one else out there quite like him.

23:52but what he's put together here with AI, space and the combination here and infrastructure play he's got a moat now that's built around him that makes it very difficult for any other company to really truly be a competitor we've seen other companies like Amazon try to compete with SpaceX as far as their Starlink division is and their satellite deployment but now things are quite different The ecosystem he has now built, I don't think anyone is going to be able to touch. You did mention you're a little limited in what you can talk about because of your fund going public in the near future. Can you give us some more color around a timeline there?

24:35We expect to probably start trading in May, possibly early June. SpaceX is one of 11 positions within the Butwood First Access Fund that we're bringing public. the second largest to Anthropic. But we also had XAI as a position in the fund, and now they merge together, but they're still slightly less than our position in Anthropic, which is the largest. There are other funds that do give access to public market investors and privately held companies. What makes Buttonwood different? Yeah, you know, we're starting to see this trend now, right, of public vehicles that own public companies that are like, you want to call them the pre-IPOs.