Wilmington Trust strategist Meghan Shue told CNBC it is “a lot easier today to sound smart” if you are very skeptical of everything related to AI and carry a little pessimism. She added that the constant desire to treat this market as “an exact analog of the late 1990s is probably not right.” Her firm is overweight equities, including small caps, at a moment when small caps are slipping.
What Paul Tudor Jones Actually Argued
Shue was responding to Paul Tudor Jones, who said on Oct. 13 that “2027 is going to be really, really challenging for the stock market.” CNBC reported that Jones expects a tough year because of increased equity supply. Business Insider reported his warning as the most challenging year since 2002, and BigGo Finance described it as the worst equity supply glut since 2002. JournalArta tied the warning to growing share sales, and Livemint reported that OpenAI and Anthropic public offerings could pressure stocks in 2027.
Jones’s case rests on supply: a wave of new shares competing for the same investor dollars. His argument centers on share issuance.
Shue’s Three Breaks From 1999
Shue cited three differences from the late 1990s: the level of valuations, what she expects from the rate cycle, and the monetization of the technology, which she believes will be more positive for the AI story. These are her firm’s views. She said she expects “a decent year next year.”
She cited a rate hike cycle as a point in favor of her positive view. She did not elaborate in the clip.
Wilmington Trust Is Overweight Small Caps
Shue said being pessimistic and “hoarding cash on the sidelines is rarely a good strategy.” The way to play it, she said, is to look at the progress of the technology and the full ecosystem. Wilmington Trust is overweight equities, including small cap.
Small Caps Are Falling While She Leans In
The benchmark small-cap ETF traded at $271.43 on the Oct. 14 delayed quote, down 1.9% on the session. It has returned -3.52% over one week and -6.04% over one month. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) returned -0.13% over the week through Oct. 13 and moved -0.01% that session, while gaining 1.8% over one month. Small caps fell over the past month as the broad market rose.
| Period | Small-Cap ETF | S&P 500 ETF |
|---|---|---|
| Year to date | 10.27% | 14.1% |
| One year | 11.06% | 17.35% |
| Five years | 20.17% | 75.83% |
| Ten years | 125.38% | 265.08% |
Shue is overweight the part of the market that has fell behind for years and is falling now. An overweight tilts against recent performance. It carries risk if small caps keep lagging.
AI Infrastructure Names Show the Ecosystem’s Swings
Credo Technology (NASDAQ:CRDO | CRDO Price Prediction) posted fiscal Q1 2027 revenue of $479.0M, up 114.7% YoY, per its SEC filing. Shares still fell 17.58% over the past week to $182.01. Applied Digital (NASDAQ:APLD) reported revenue of $341.9M, up 432.4%, with roughly $36B in signed revenue, yet the stock is down 17.62% year to date. Its $6.4B debt load against $3.7B in cash shows the leverage behind the expansion.
Shue’s Outlook Remains a Forecast
Shue’s valuation, rate and monetization claims reflect her firm’s views. A strategist’s one-year outlook is a forecast.
Two Different Questions on the Table
Jones is debating about how much new stock hits the market next year. Shue is debating about whether the technology earns its valuation. Both can be true at once. Investors considering small caps can keep an eye on IPO calendars and on earnings from AI suppliers like Credo and Applied Digital (we covered seven more of these infrastructure names, from power to cooling to networking, in a free report you can grab here).