Navitas: Even Explosive Growth May Not Be Enough

2026-06-02 08:50:23 ET

Not so long back, the markets were wary about long duration assumptions and even AI trades were cooling visibly from September 2025 to March 2026. The market-wide drop in March potentially provided a pivot (like it has been providing in the past few corrections, notably April 2025) that led to another explosive rally, especially rewarding the AI infrastructure camp. The bigger question is that while several AI infrastructure trades are backed by real earnings revisions in the past 6 months, some of the narrative-based names do not have that cushion. This leg up since March could really be a collateral gain for several stocks that are not only fighting a high valuation now (like all of AI infrastructure potentially is), but do not have the same degree of earnings cushion to sustain the rally. If the stagflation story continues to remain relevant, these narrative stocks could come under pressure, depending on the narrative strength and valuation disconnect....

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