The correction in AI‑related stocks has sharpened as sentiment has overtaken fundamentals, said Drew Pettit, Chief Investment Strategist at Roundhill Investments—he noted that earnings revisions for memory companies are still climbing, even though short‑term volatility is expected to persist.
The shift is evident in the way investors are moving away from pricing power narratives and asking harder questions about long‑term durability. Pettit distinguished memory chip makers—Micron, Samsung, SK Hynix—from AI cloud infrastructure names like CoreWeave, pointing out that the latter are grappling with rising borrowing costs and tightening debt profiles, whereas the former enjoy supply‑side constraints that keep earnings robust.
In the broader Indian market context, Roundhill remains constructive on emerging markets overall but has held back on increasing exposure to Indian equities until earnings revisions stabilize and move higher—a move the strategist sees as the key catalyst for a positive tilt.
Looking ahead, Pettit expects near‑term volatility to keep trading floors jittery, but he maintains that the long‑term earnings trajectory for memory firms remains intact. The firm’s forward guidance is to monitor earnings revisions closely, with a view to re‑engage Indian equities if the earnings narrative solidifies further.