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Welcome to Today’s Smart Money Roundup.
Software stocks are getting crushed, and Barron’s is calling it “overdone.” Salesforce (CRM) is down 27% over the past year despite Wall Street hyping its Agentforce AI platform as a “medium-term growth engine.” The stock’s at $233.54, down 10.4% in just the past week. Snowflake (SNOW) fell 7.1% this week. The narrative? This selloff has gone too far. The reality? Software multiples remain elevated-CRM trades at 32x trailing earnings with a forward P/E of 18x, while SNOW sits at 16x price-to-sales despite burning cash with a negative 31% profit margin. When Barron’s tells you a selloff is “overdone,” that’s usually the middle of the correction, not the bottom. The bar for these companies to beat earnings keeps rising, and the market is finally repricing growth that isn’t materializing at the pace investors paid for.
Reddit (RDDT) is nosediving today, down 10% this week to $228.61. The stock trades at 116x trailing earnings and 25x sales, premium valuations that assume flawless execution. Yet Reddit sentiment data shows retail traders remained aggressively bullish through January 15, celebrating options wins and discussing RDDT as a successful IPO story. One wallstreetbets post titled “Quick $44k gain on RDDT $220 options in 15 minutes” drove sentiment scores to 82 (very bullish) on January 15 at 3pm ET. By afternoon, sentiment collapsed to 33 (bearish) as reality set in. This disconnect-retail euphoria meeting institutional selling-is the classic setup for further downside. When retail is still bragging about call option gains while the stock bleeds, that’s not capitulation. That’s denial.
Taiwan Semiconductor (TSM) just hit all-time highs at $342.92, up 72% over the past year and 19% in the past month. The company posted 30.3% revenue growth year-over-year with a 43.3% profit margin. NVIDIA (NVDA) is up 42% over the past year to $187.30, with Q3 2025 revenue of $57 billion, up 62.5% year-over-year. Yet the real bottleneck isn’t chip manufacturing, it’s power infrastructure. Vistra Energy (VST) surged 19.7% this week to $180.27, up 11.7% year-to-date. UBS raised its target to $233, recognizing that AI data centers need electricity more than another semiconductor fab. Meta’s nuclear power deals with Constellation Energy (CEG), up 18.8% over the past year, tell the real story. The AI infrastructure trade is shifting from chips to the power grid. Follow the electricity, not just the silicon.
Netflix (NFLX) reports earnings Monday, January 20 after the bell. Wall Street expects $0.56 EPS on $12.21 billion in revenue. The stock is down 6.1% over the past month to $88.05. Prediction markets show overwhelming consensus for NFLX closing in the $80-$90 range this week (79.5% probability), with secondary support for $90-$100 (18.5%). That’s 98% of traders betting on a tight range, no catastrophic collapse, but no breakout either. The bar is low after the stock’s pullback, but when Motley Fool starts asking “Is Netflix a Good Buy Right Now?” that’s usually a contrarian signal. Retail media asking if something is a buy typically marks local tops, not bottoms. Netflix’s Q3 2025 earnings missed estimates by 15.7% ($0.59 actual vs. $0.70 expected), breaking a five-quarter streak of mostly positive surprises. The company needs to prove subscriber growth and pricing power can coexist, or this $88 level becomes resistance, not support.
The reality check everyone’s ignoring: American EV companies are burning cash while Chinese competitors eat their lunch. Wolfe Research just downgraded Rivian (RIVN) to sell with a $15 price target. The stock is down 14.2% this week to $17.06, trading at 3.7x sales with a negative 61.3% profit margin and negative $2.6 billion EBITDA. Rivian’s revenue grew 78% year-over-year, but the company is losing $3.10 per share. Tesla (TSLA) isn’t much better. Earnings collapsed 37% year-over-year in 2025 despite 11.6% revenue growth. That’s pure margin compression. The company’s profit margin fell to 5.3% with operating margins at 6.6%. Tesla trades at 303x trailing earnings, an absurd multiple for a company with deteriorating profitability. Meanwhile, Chinese EV maker NIO grew revenue 16.7% year-over-year and trades at just 0.16x sales. The market is repricing the American EV dream downward while everyone obsesses over NVIDIA’s latest move.
What to watch: Does institutional money actually buy this software “dip,” or do we see more distribution? Netflix earnings Tuesday will reveal if consumers are still paying for premium content. And watch power utility stocks: they’re the real AI infrastructure play for 2026, not another semiconductor rally. When Barron’s says a selloff is overdone, that’s usually the middle, not the end. The trade everyone’s ignoring is energy infrastructure while they chase chips that have already run. And the quiet disaster is American EV companies burning billions while Chinese competitors build better cars for less money. Follow the power grid, not the headlines.