Markets have turned bullish following Nvidia standout earnings and a major legal challenge to the so-called “Liberation Day” tariffs. According to Baird investment strategist Ross Mayfield, this could reignite enthusiasm for the AI trade and bolster the tech sector’s rebound after a sluggish start to 2025.
Mayfield, a vocal supporter of AI-adjacent stocks, said he began advocating for them during the April pullback. “Nvidia’s strong results — especially the persistent demand for their core products — should continue to energize investors around the AI theme,” he told MarketWatch in a follow-up comment. “It’s the bellwether for the most important secular trend in markets today, and it keeps expanding what’s possible in AI.”
He noted that Nvidia tech offers an attractive advantage amid political uncertainty: it’s driven by structural tailwinds, not policy whims. “AI adoption and the massive capex going into data centers and chips are building a future where AI touches every corner of business,” he said. “Politics can’t change that.”
Mayfield sees long-term opportunity in big tech, especially when valuations dip. “The clearest play for me was to lean into something I believed would still be there in 6, 12, even 60 months — that’s AI and tech winners. And when they’re trading at a discount, those are rare chances.”
Looking ahead, he’s bullish on stocks over the next six to twelve months despite near-term signs of being “a little overbought.” He pointed to broad market strength, with tech, consumer, financials, and industrials all gaining off April lows. “It’s a risk-on environment with cyclical leadership,” Mayfield said. “The Magnificent Seven and AI-linked names are regaining momentum.”
While he doesn’t rule out a speculative bubble like in the early 2000s, he believes we still have room to run. “If you compare this to the late ‘90s, with ChatGPT as the ‘Aha’ moment, we’re not there yet,” he said.
Still, Mayfield warns investors to stay cautious. Valuations remain high, and risks — such as shifting trade policies under the Trump administration — could shake the market. “Volatility could spike to levels we haven’t seen since the COVID era,” he added.
One bright spot is the evolving role of retail investors. Over the past six weeks, they’ve been consistently buying dips, even as institutions remained hesitant. That, he said, signals a possible shift in how markets are structured. “Retail is becoming savvier — regularly contributing to 401(k)s and staying invested. That’s not something we could always count on,” he said.
Still, the big test is yet to come. “We’ve had several bear markets in the past decade, but they’ve been relatively brief. Dip-buying has paid off quickly. At some point, that resilience will face a more serious test.”
