Muddy Waters founder Block: it is not advisable to short large US tech stocks at the moment.

Carson Block, founder of short-selling institution Muddy Waters Capital, stated that now is not the right time to short American tech giants, despite increasing warnings about a potential bubble in artificial intelligence (AI). Block said, "In the current market, I would rather be long than short. If you try to short Nvidia or any large tech stock, your investment career will not last long." Recently, the US stock market has been fluctuating as investors worry about the overheating of tech stocks. The S&P 500 index has dropped over 3% from its peak in October. However, Nvidia's earnings report released after the market closed on Wednesday showed significantly better-than-expected revenue, profits, and outlook for the next quarter. This earnings report from Nvidia has largely alleviated investors' concerns about the potential fading of the unprecedented global AI spending frenzy. As of the time of writing, Nasdaq 100 index futures, which are dominated by tech stocks, were up 1.5% in pre-market trading on Thursday. At the same time, Block revealed that he is focusing on small companies entering the AI field to find potential shorting opportunities. He said, "You will see many companies skirting around AI, AI pretenders, these are the short targets you want to find." But he also pointed out, "As long as market leaders like Nvidia continue to rise, this will be a very dangerous trade." Block also stated that the proliferation of passive investment trading has "damaged the market and significantly weakened price discovery capabilities." He explained, "No matter how expensive Nvidia becomes, it does not matter. All those funds buying the S&P 500 index will not sell Nvidia without net outflows. If they have inflows, they will buy Nvidia every day at any price." What's next for the US stock market? Wall Street remains divided Like Block, Dan Ives, tech research head of Wedbush Securities, also expressed a positive attitude towards US tech stocks. He described the current market's anxiety about AI trading as "short-sighted behavior" and asserted that tech stocks the main driving force behind the rise of the US stock market over the past two years will continue the bull market for at least another two years. This tech bull pointed out strong demand for semiconductor ETFs in the market, emphasizing, "Since June, we have seen a 30% increase in related demand." He defined the current environment as a "capital expenditure supercycle," considering it the early stages of technological revolution and stating that investors are only in the "second or third stages" of the AI revolution. He also defended the massive capital expenditures of large tech companies, explaining, "For every $1 in capital expenditure these companies put in, they will eventually get $8 to $10 in return over the next few years." Jeff Krumpelman, chief investment strategist and head of the equity department at Mariner Wealth Advisors, also believes that the recent fluctuations in tech stocks are more about profit-taking and halts causing volatility than a substantial shift in AI or earnings fundamentals. This strategist emphasized that early-stage AI applications remain a strong theme that will continue for several years, and the current fluctuations should not be compared to the bursting of the dot-com bubble period, stating, "This is a real trend. Artificial intelligence is still in its early stages, and the future looks promising, not a replay of the 2000 dot-com bubble." Earlier this week, Michael Wilson, chief US equity strategist at Morgan Stanley, issued one of the most bullish views on the US stock market. He predicted that supported by strong corporate earnings, the S&P 500 index will rise 16% in the next year. Michael Wilson forecasted that by the end of 2026, the S&P 500 index will trade near 7,800 points. This target is among the highest levels among Wall Street strategists and represents the index's fourth consecutive year of double-digit gains. Michael Wilson said, "We are in a new bull market and profit cycle, especially for many parts of the index that have lagged before." The strategist expects earnings per share of S&P 500 index component companies to grow by 17% and 12% in the next two years. He mentioned factors such as stronger pricing power for companies, efficiency improvements from AI, loose tax and regulatory policies, and stable interest rates as supportive factors. However, caution remains on Wall Street. Peter Oppenheimer, a strategist at Goldman Sachs who accurately predicted that US stocks would underperform other regional stock markets this year, expects US stocks to continue lagging behind other major markets globally over the next ten years. He forecasts that the S&P 500 index will have an annualized return of 6.5% over the next decade, the weakest among all regions; emerging markets are expected to be the strongest, with an annualized return of 10.9%. Moreover, UBS maintains an overall bearish stance. On one hand, the bank is concerned that US stock valuations are at their highest levels in nearly 40 years and that there is a high concentration of tech stocks, posing a risk of a valuation bubble. On the other hand, UBS believes that the slowdown in US economic growth will indirectly affect US stocks. The bank predicts that US GDP will sharply slow from an annual growth rate of 2.0% in the second quarter to 0.9% in the fourth quarter, and also expects a 1% rate cut before the end of the year, double the market's expectations. UBS explicitly warns of significant downside risks for US stocks in the near term. Additionally, the bank mentioned that global economic growth may face a temporary slowdown due to tariff measures, which will also impact decision-making for US stock investors, further increasing market uncertainty.