👋 Good morning! Here's what our Executive Editor Brian Sozzi is thinking about.

Today's Takeaway is by Brian Sozzi, Executive Editor.

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The Nasdaq Composite crossed the 17,000 mark for the first time earlier this week.

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It's since lost some of its shine, down around 2.8% since then, but I found this "milestone" to be really cool, though I'm not exactly one to get excited about record highs on major exchanges or on certain stocks.

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When I began my career in the summer of 2004, the Nasdaq Composite was at 1,800 or so and not too far removed from the dot-com bust. That's a ninefold-plus increase in 20 years — at the same time my hairline DECREASED by ninefold!

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Today, we are witnessing another tech boom, with the daily advancement of generative AI fueling the rise of companies such as Nvidia, Anthropic, and OpenAI. While some of this tech is scary as hell, there is no denying the impact it's having on value perception in markets.

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And throughout the week, I got the latest dose of insight into how the spread of AI is powering financial statements and outlooks.

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HP Inc. CEO Enrique Lores told me a factor in the company's above-consensus second quarter EPS guidance is the release of higher-priced AI PCs in mid-June. These will be HP's first crop of AI PCs with beefier processors to support various AI-related tasks.

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Chewy CEO Sumit Singh didn't explicitly mention AI in our chat, but you could see how it's beginning to drive better sales and margins. It's my understanding the company is able to react more quickly to consumer needs because of its investments in automated technology.

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A similar vibe was felt when I talked to Abercrombie & Fitch CEO Fran Horowitz, who is using new technology to keep inventory low, then "chase" demand signals it's getting in real time. The end result: impressive margin expansion.

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Exciting stuff!

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And all of it helps to understand the enthusiasm around a lot of big-cap tech stocks.

But then there were those rough Salesforce numbers and guidance.

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Oof.

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I wrote about them at the crack of dawn in our live markets blog, as I couldn't get over how disappointing the quarter was — truly came out of left field given the company's new suite of AI offerings.

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Nevertheless, guidance was lackluster and Salesforce could be sitting out of the hot AI trade until the macroeconomic backdrop improves.

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But the shocking Salesforce quarter sent me off to dig into the tech-heavy Nasdaq, specifically the Nasdaq 100 — the 100 largest nonfinancial companies traded on the Nasdaq — to see if there are warning signs creeping into the picture.

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In short, I'm not liking what I've found, for you believers in stock prices being the truth — or a predictor of future fundamentals.

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While the Nasdaq 100 is hovering around fresh highs amid strength in names like Nvidia and Apple, drastically fewer stocks are holding above their 50-day moving averages, per new research from Sundial Capital Research. As of last week, fewer than 60% of stocks in the Nasdaq 100 were holding above their 50-day moving averages. That's not great.

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Fewer and fewer stocks are holding above their 200-day moving averages as well, Sundial notes.

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"It looks ominous on a chart, but historically, most of the weakness in forward returns was confined to the next 1-3 months," said Sundial's research team.

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Some of the laggards in the Nasdaq 100 include consumer names Dollar Tree and Lululemon. But AI plays in Workday and Autodesk have also been relatively underperforming.

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"It’s a have-and-have-not market for tech stocks. Investors want to bet on the pure-play AI revolution plays with Big Tech dominating and leaving other tech stocks in the dust abandoned," Wedbush's omnipresent tech analyst Dan Ives tells me.

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Truist co-chief investment officer Keith Lerner tells me weakness in non-tech names could continue amid a convergence in factors.

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"What seems to be hurting the other sectors outside of tech is the bounce back in the 10-year Treasury yield; after hitting support just above 4.3%, it's now back above 4.6% as the market has been dialing back the number of Fed rate cuts. And as we move further into June, the election will come further into view. This is likely adding to some of the recent selling pressure," Lerner says.

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I am not here saying the Nasdaq is headed for a summer bear market. What I am saying is that not everything is as healthy in tech land as it appears, and there could be a pullback in the top tech stocks this summer as investors reassess valuations from the beach.

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Are there values to be had among Nasdaq stocks not participating in the current rally? Before you look for them, hear how noted value investor Jonathan Boyar goes about his process on the latest Yahoo Finance "Opening Bid" podcast.