Broadcom’s post-earnings pullback has sparked questions about whether enthusiasm around artificial intelligence has outpaced reality, but investors continue to see long-term opportunities as AI spending expands across industries.
BNN Bloomberg spoke with James Learmonth, co-chief investment officer and portfolio manager at Harvest ETFs, about Broadcom’s results, the next phase of the AI investment cycle and why he remains constructive on U.S. equities despite ongoing geopolitical and policy uncertainty.
Key Takeaways
- Broadcom’s decline reflects elevated investor expectations rather than a deterioration in the long-term AI investment thesis.
- AI spending remains robust, with investment opportunities expanding from chips and hardware into a wider range of industries and infrastructure providers.
- Hardware companies continue to be among the primary beneficiaries of AI-related capital spending, though diversification within the sector remains important.
- Industrial companies tied to power generation and data centre infrastructure are emerging as indirect beneficiaries of AI growth.
- Learmonth remains constructive on U.S. equities, citing signs of economic reacceleration and support from fiscal and monetary policy.
Read the full transcript below:
LINDSAY: Shares of Broadcom are under pressure after the semiconductor and software maker issued guidance that failed to live up to investors’ expectations. That’s having a cascading effect through other stocks tied to AI. So, let’s get some perspective on the AI theme as a whole, as well as Broadcom. Joining me now is James Learmonth, co-chief investment officer and portfolio manager at Harvest ETFs. Good morning, great to have you join us.
JAMES: Good morning. Thanks for having me.
LINDSAY: What do you make of the reaction to Broadcom’s latest earnings results to start, and do you think investors are maybe overreacting a little bit?
JAMES: Yeah, I think with regards to Broadcom, what we’re really seeing here is strong results meeting extremely high expectations, and it never feels good, but unfortunately — or sorry, fortunately — it’s actually healthy for stocks over the longer term. At Harvest, we’re focused on long-term investments, and so through that lens, Broadcom still very much meets what we consider to be the qualifications of a technology leader.
LINDSAY: Can you elaborate on why you feel that’s healthy for a stock in the longer term?
JAMES: You know, similar to what we’ve seen over the past couple weeks, it’s very easy for expectations to get well ahead of reality. Over the past, particularly the past four weeks or so, we’ve seen stocks gap up on a rapidly evolving AI environment, and so it’s important for investors to get that gut check, so to speak, to reevaluate their long-term thesis on stocks. Ultimately, over the long term, it tends to make bull-market advances much more sustainable.
LINDSAY: Okay, so we’re seeing a bit of a selloff in the tech sector today as a result of what Broadcom reported. What are your thoughts on the kind of general tech rally that we saw lately that seems to have maybe come to — has it come to an end now, or is this just a blip that we’re seeing today?
JAMES: No, I think this is just a normal healthy correction. You know, investment in AI is still very strong. We’ve seen examples of companies continue to invest strongly, like just a couple days ago, Google announcing for the first time in a very long time the issuance of equities in order to support their spending levels. We think this is going to continue for a while, but keeping in mind it is a rapidly evolving theme. Even within such a narrow focus, you know, a couple of years ago the AI theme was predominantly about Nvidia and GPUs. Then that turned to looking at storage and memory semiconductor stocks as a key driver. More recently, networking equipment and servers and CPUs, traditional CPUs like those made by AMD and Intel, have become key components of agentic computing.
LINDSAY: Where do you think that’s — oh, sorry, continue.
JAMES: Oh, go ahead.
LINDSAY: Well, where do you think that story is going to go next? Like, when it comes to the AI theme, as you say, it’s rapidly evolving. Where are you looking forward to in AI, and what companies, or I guess sectors, do you think are going to play a part?
JAMES: I think specifically within AI, or within technology, hardware is still probably the place to be invested. They’re the primary beneficiaries of all this spending coming through, but it is important, even within such a narrow focus, to remain diversified. We saw a very violent rally in software stocks last week, as some of those investor concerns about significant disruption from AI sort of faded into the background, and so it’s important to remain diversified. When we look outside of the technology sector, we see a lot of different areas that are starting to see benefits from the significant amount of spending that’s going into AI and to support AI infrastructure.
LINDSAY: What areas are you liking right now in terms of sectors?
JAMES: I think there’s some opportunities in industrials. One of our favourite names there is Caterpillar. They’ve been benefiting primarily from significant investment in power generation, so they make turbines that go into gas power plants, as well as backup generators that are being used to support the power needs of data centres. But more broadly, and looking forward, we’re starting to see signs of reacceleration in the U.S. economy, and Caterpillar’s business is ideally suited to benefit from that as well, with their large businesses in construction equipment and mining equipment.
LINDSAY: Okay, and you also like Nvidia because Caterpillar was one of your stock picks for today. We talked about that. You like Nvidia as well. What is it that you like about Nvidia?
JAMES: I do. Obviously, Nvidia has not been the standout performer within the AI theme over the past several months that it was just a few years ago, and I think those days of kind of 30 per cent reactions in the stock to strong earnings are probably in the past. But what we have seen is the earnings multiple for Nvidia has actually come down significantly over the past few months, as investors have started to price in that transition into a more mature growth phase. What one of our clients, I like to paraphrase, called Nvidia moving into its Apple years. So we expect strong growth to continue there, and that should continue to propel the stock price over time because Nvidia does remain a key player within the AI infrastructure theme.
LINDSAY: I’m wondering what your approach to investing is at a time when there’s a lot of uncertainty caused by geopolitics. As you were talking earlier about diversifying, I’m sure that’s part of it. And when you diversify, we talked about the sectors you like, but is there anything you think investors should be staying well away from right now?
JAMES: I think by and large diversification really is key. You know, we’ve been advocating a barbell approach to the markets for this year. We still very much like technology, and we think you want to have an allocation to that theme and to growth in general, but you want to balance that with some more defensive areas like health care, which are trading at historically low valuations. You know, I’m not a fixed-income guy. I’d be a little bit more concerned about the potential for reacceleration and inflation, particularly. Looking at the long end of the bond curve, that makes me a little bit nervous out there. I’d be a little bit more cautious at that end of the spectrum.
LINDSAY: And just lastly, aside from AI, are you optimistic about the broad U.S. equity markets right now and the direction they’re going in?
JAMES: Very much so. Very much so. We think that, as I mentioned, the U.S. economy is starting to show signs of reacceleration more broadly. We’re seeing that in some of the soft manufacturing data, like the survey data coming out. We’re seeing signs that the labour market is starting to improve. We’ll get the non-farm payroll numbers tomorrow and see if that confirms it. But we’ve also got a tremendous amount of both fiscal and monetary stimulus in the form of tax cuts and business investment incentives from the One Big Beautiful Bill Act last year, as well as the interest-rate cuts that the Fed did over the past couple of years that are just now starting to filter into the economy. So we think that will continue to drive markets and should drive broader participation, which I think will make the market a healthier investment opportunity overall.
LINDSAY: Okay, James Learmonth, co-chief investment officer and portfolio manager at Harvest ETFs. Thanks so much for your time. Appreciate it.
JAMES: Thanks for having me.
---
This BNN Bloomberg summary and transcript of the June 4, 2026 interview with James Learmonth are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
