The Dividend Cafe - Thursday - June 4, 2026

Episode Date: June 4, 2026

Brian Szytel recaps a market recovery day after a prior sell-off, with the Dow up 874 points, the S&P modestly higher, and the Nasdaq slightly lower due to a broad semiconductor decline led by a major custom AI chipmaker falling about 15% despite revenue growth of roughly 200% year over year, as guidance failed to meet lofty expectations. He puts the AI boom in context, citing about $1 trillion in annual hyperscaler and global AI capex—far exceeding the late-1990s fiber buildout pace—and notes additional spending needed in utilities to power data centers, emphasizing the U.S. lead in capital and scale. He warns that parabolic charts and IPOs priced at extreme revenue multiples require discipline, and argues this environment favors active management and diversified allocations beyond AI stocks. He also notes higher-than-expected initial jobless claims (225k vs. 215k) and a downward revision to U.S. productivity (0.3 from ~0.6). 00:00 Welcome and Market Recap 00:34 Semiconductor Selloff 01:55 AI Capex Boom 03:43 Valuations and Fundamentals 04:53 Active Management Case 06:04 Economic Calendar Check 06:27 Sign Off and Disclosures Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Welcome to Dividend Cafe. This is Brian Saitel with you here again from our Newport Beach, California office. On a recovery day from yesterday's sell-off in the market, we got a positive Dow by, believe it or not, 874 points. The S&P was up 4 tenths of a percent and the NASDAQ was actually lower just a little bit. And the reason is a broad-based sell-off in the semiconductor space, and it was largely driven by a very large name that we previously owned, technically, and sold for evaluation purposes. But this is one of the custom AI chip makers out there in Orange County based in California. But the name was down 15% or so. It's a huge trillion-dollar market cap, and so it drove a lot of the sector lower.

And my comments today were really around both the excitement of what's going on. on in the space because it should be exciting. And I'm going to go through that with you, but that things that get priced in to perfection that really just don't have a lot of ability to excite even when earnings come out. And this particular name had revenue up 200% over the prior year. So it's not like the numbers weren't good. It's just that guidance couldn't keep up with what was expected. And imaginations can come up with a lot of great things. More than reality can actually fund them. And so you get disappointment. And so the whole sector was down. And most of those charts, by the way, when you look at them, they literally are parabolic looking. It's tough for people

that are over-concentrated in the semi-space and have a day like today where it gets sold off. On the other, it's still up a ton on the year. And also, it's not like the premise of what is driving. The run-up isn't something real. It sure is. And I'm going to transition into that comment here when I talk a little bit about what's going on with the hyperscalers and with the AI capital expenditure that's going into this market. So if you add up all the big hyperscalers in the country in the U.S., but then you also feather in some of the global names that are out there that are also spending and you put it all together, it's about a trillion dollars for this year. So one T with a T. So a trillion dollars is going into building out AI in one year. That's equal to, by the way,

the entirety of what was spent on the fiber optic build out in the network in the late 90s to build the entire internet. So that was over five-year period. And now we're on a run rate on an annual basis of the same amount of money of about double that amount. So we spent $500 billion in the late 90s that we're spending a trillion now, but annually in the $500 billion was over the five years. So call it $100 billion a year. So basically we're on an annual pace that's 10 times more than the largest infrastructure investment cycle, the prior generation. So it's very exciting. It's huge. And when you put that expenditure into context, let me just break it down in another way. That would be equal to the entire defense spending budget

of China, Russia, the UK, France, Germany, and Japan combined. And we're doing that on an annual basis. And also keep in mind in this thing that there's a trillion dollars that will get spent on building out and advancing and improving the utility sector to afford all the electricity for the data centers and all the infrastructure behind all this. So the point is it's exciting and also the point is the U.S. is just the only game in town. Not only is all the technology from the U.S., but all of this size and the scale and the ability to drive capital to fund it all is in the will to do it is all here as well. And so those are all the good things.

The negative, though, is that when you have charts that go parabolic, thinking of how great that is in the course of several years, this is now the fourth year in a row of double-digit returns on the market, you just, just get names ahead of themselves. And the custom semiconductor name today that we talk about that sold off so much along with the whole sector is a name that we trimmed and we obsess over doing those things because we have to be able to just take your emotions

and excitement aside and look at what the fundamentals say, what do the numbers say? Is there really a cost-benefit analysis that gets the valuation to something that really pencils? Yes or no. And when you have IPOs coming out, what sounds like now daily, trading it 100 times revenue, Not earnings, most of them have no earnings, but just 100 times revenue.

And that's somewhat commonplace because it has quantum associated with it or it has AI associated with it. You just know that you're in one of those periods and you have to be diligent about it because when the tide does go out, it'll be the people that were just paying attention to fundamentals and didn't lose sight of them, even though everyone else did. That'll be wearing the shorts, figuratively speaking, as the tide goes out. Those are my comments for the day. So there's a combination of both excitement and also keeping reality. The question in there today was about investment management models if the big firm's sort of passive box style model is fine just to put the money in or if it should be more basically actively managed.

Look, I think that for assets that people have saved for their entirety, for their entire lives to basically fund all of the important things they ever wanted to do in retirement, then yeah, I think someone should pay attention to that more closely and it should not be in a model. The models will actually get away with it while, like I said, the rising tide is happening. It's lifting all the boats. It'll mask what are the imperfections in there and what is not thoughtful and what is not dynamic. Won't matter as much of just everything tends to be going up. But when the tide goes out, you will see the imperfections in those things and unfortunately learn the hard way. So my advice to the market in general, this is a general just comment, is this is a time for active management.

and it's a time to ensure that your asset allocation isn't just all AI stocks and that you have diversification amongst other asset classes to real estate, bonds, cash, things like that, alternatives. Evergreen advice, but in this time, with all the excitement and sort of animal spirits circling out there, I really wanted to drive at home. A couple of things in the economic calendar before I let you go, there was initial jobless claims that were a bit higher than expected. We got 225 versus 215, and then we had U.S. productivity, get,

revised much lower from about 0.6 or so to 0.3, which is kind of shocking when all we're talking about is the productivity from AI. And of course, productivity itself gets revised down. So, go figure on that one. But with that, I'll let you go for this evening and hopefully watch either some MBA or Stanley Cup or, gosh, French Open. I guess we've got a couple of different sporting events to pay attention to. But it was good to hear your questions. As always, reach out. Have a good evening. And we'll talk to you soon. Thank you. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC.

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