Venu Krishna went on CNBC’s Closing Bell Overtime on June 30 and argued that the money fleeing Big Tech is running the wrong direction. His pitch: a PEG ratio below 1 for the Mag 7 excluding Tesla, roughly 30% earnings growth in Q1, and multiples that have already been marked down. “Everybody, when they think about rotation, is moving away from them. And those are precisely the areas which we continue to like.”
Krishna’s team lifted its S&P 500 target to 7,800, built on 21% earnings growth this year decelerating to 15-16% next year, with multiples deliberately cut 5-10% across buckets. He is calling the Big Tech setup “fantastic” because you have earnings compounding fast while the multiple has taken a four-handle haircut. For chip stocks, he sees 18 months of earnings visibility from hyperscaler spending with “no sign of reducing,” projecting hyperscaler capex reaching $1.2 trillion in 2028, roughly $250 billion above consensus.
Where the “under 1” math actually lives
The argument lands hardest at Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction), which trades at a P/E of 16x after Q1 revenue of $109.9 billion (+21.8% YoY) and Google Cloud growth of 63% with backlog nearly doubling quarter-over-quarter to over $460 billion, per the company’s Q1 2026 earnings release. That is a growth stock at industrial prices.
Meta Platforms (NASDAQ:META) sits at a P/E of 20x with Q1 revenue growth of 33.1%. Microsoft (NASDAQ:MSFT) is at 27x with an AI run rate that hit $37 billion, up 123% year-over-year. Amazon (NASDAQ:AMZN) is at 33x with AWS growing 28%, its fastest in 15 quarters. Apple (NASDAQ:AAPL) is the outlier at 38x on 16.6% revenue growth, which is why the PEG story looks better without it. And NVIDIA is the chip half of Krishna’s thesis, with Q1 FY27 revenue up 85.2% and Data Center revenue of $75.25 billion, +92%.
Then look at what the tape has done. Microsoft is down 22.53% year-to-date and 17.15% over the last month. Meta is down 14.52% YTD. Amazon shed 11.93% in the past month. Meanwhile the Invesco QQQ Trust is up 19.87% YTD. The dispersion is the whole point. Money has crowded into the chip side while selling the platforms that fund the chip side.
The rate risk that could kill the trade
Krishna flags rates as the primary equity risk, because AI capex is itself feeding inflation through higher memory, server, and storage costs. That makes Fed cuts unlikely. His base case: no hikes this year, potentially one next year. The 10-year Treasury yield sits at 4.38%, in the 76th percentile of the last 12 months, and Core PCE is running in the 90.9th percentile of its trailing year. Higher discount rates compress the value of distant AI earnings, which is why the “fantastic” setup only stays fantastic if rates behave.
The capex numbers back Krishna’s chip case. Microsoft’s quarterly capex hit $30.88 billion (+84%), Alphabet’s $35.67 billion (+107%), and Meta guided full-year capex up to $125-145 billion. Amazon committed roughly 2 gigawatts of Trainium capacity to OpenAI and up to 5 gigawatts to Anthropic. That spend is already contracted.
What the crowd is actually doing
The uncomfortable part of Krishna’s call is that you are buying what everyone else is selling. But if hyperscaler capex really is a durable runway, then sellers of Alphabet near 16x earnings and Meta near 20x are handing away growth stocks at cyclical multiples. The rotation trade assumes AI monetization has topped out at the platform layer. Q1 revenue prints across the group make that a hard argument to defend.
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