The S&P 500 has held up. The headline numbers look constructive. And semiconductors have surged 65% since their March lows. From the outside, the market appears resilient.
Still, Liz Thomas, head of investment strategy at SoFi, wants investors to look more carefully at what’s underneath those numbers.
Thomas said stock market “not all that resilient”
Thomas appeared on CNBC’s “Squawk Box” on May 11 to discuss the current market environment, the Iran war’s impact on energy prices, and the state of the AI trade. Her central message was direct.
“The market broadly, the headline part of it looks resilient, but really under the surface, it’s not all that resilient,” Thomas told CNBC.
Her argument is that the rally driving index performance is narrow rather than broad. Technology and communications stocks, which are relatively insulated from trade war impacts, have done most of the heavy lifting. The rest of the market, she argues, tells a different story.
Why semiconductor strength is not the market signal it appears to be
Thomas specifically called out the semiconductor sector’s 65% surge since its March lows as evidence of the narrow leadership driving the market, according to CNBC.
That kind of parabolic move in a single sector can pull the headline index higher while masking weakness in parts of the market that are more exposed to slowing growth, energy costs, and trade uncertainty.
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Thomas clarified that she sees the AI trade as still having room to run. But she also flagged near-term consolidation as likely. And her advice for investors tempted to chase the semiconductor rally was pointed.
“I don’t think that this is the time to jump on the semiconductor train,” she told CNBC. Stocks that have moved parabolically since late March are due for a pullback or pause, she said, and investors would be better served buying laggards rather than chasing recent winners, CNBC confirmed.
The valuation picture that’s kept the AI rally going longer than expected
Thomas acknowledged one dynamic that has allowed the technology rally to extend further than many expected: multiple compression. Despite strong earnings from AI-linked megacaps, valuation multiples have actually been contained rather than expanding, which has, she explained, “elongated the runway” for the technology rally.
That is a nuanced observation. It means the AI trade has not yet reached the kind of valuation excess that typically precedes a sharp correction. Strong earnings have grown into elevated multiples rather than pushing them higher, giving the sector more room before it runs into a valuation ceiling.
But Thomas still sees the rally’s narrow base as a vulnerability. S&P 500 margins are running above trend, providing some buffer against higher energy costs. If energy prices stay elevated for a prolonged period, that cushion could shrink and begin to pressure earnings in sectors beyond technology, Seeking Alpha noted.
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What Thomas says investors should be watching instead
For investors trying to position portfolios appropriately, Thomas offered a specific framework. Rather than chasing the sectors and stocks that have already run, she recommends focusing on areas that have lagged. Cyclical sectors such as banks need to show renewed strength before the market can be said to have a truly solid foundation beneath the headline numbers, CNBC noted.
Thomas also pointed to the 200-day moving average as a key technical reference. The S&P 500 is still above that level, which suggests the market has not entered a genuinely severe downturn. But she emphasized the importance of watching breadth, not just the headline index. If more stocks begin participating on the upside, the rally becomes healthier. If leadership stays concentrated in a handful of names, the market remains vulnerable to a sharper pullback if that group stumbles.
The bigger read from Thomas is not that the market is broken. It is that investors should resist the temptation to treat a calm surface as evidence of broad underlying health. Two very different markets can produce similar index-level numbers when the gains are concentrated enough, and right now, she argues, that is exactly what is happening.
Key context from Liz Thomas’s May 11 CNBC “Squawk Box” appearance:
- Thomas’s quote on market health: “The market broadly, the headline part of it looks resilient, but really under the surface, it’s not all that resilient.”
- Semiconductor sector gain since March lows: Thomas cites 65% gain as evidence of narrow market leadership.
- Thomas’s advice on semiconductors: “I don’t think that this is the time to jump on the semiconductor train.”
- Valuation dynamic: Multiple compressions have kept valuations contained despite strong earnings, “elongating the runway” for the tech rally.
- Thomas’s positioning recommendation: Buy laggards rather than chasing recent winners; cyclical sectors like banks need to show strength.
- S&P 500 technical level: Still above its 200-day moving average as of May 11.
Sources: CNBC, Seeking Alpha
What Thomas’s view means for investors navigating the rest of 2026
Thomas is not issuing a bear market call. She is not urging investors to exit stocks or abandon the AI theme.
Her message is more specific: The market’s apparent resilience is real at the index level but fragile at the breadth level, and investors who mistake the two are taking on more risk than they realize.
The distinction matters most if the narrow leadership group runs into trouble. If the megacap technology stocks that have been carrying the index begin to falter, whether from a slowdown in AI spending, an earnings miss, or a shift in risk appetite, the rest of the market may not be in a position to absorb the shock.
The laggards that Thomas recommends targeting may offer both better value and better protection against that scenario.
Her advice to stay disciplined, watch breadth, and resist emotional reactions to every market move is particularly relevant heading into a period where the news flow around AI earnings, energy prices, and trade policy is likely to remain volatile.
Investors who understand the difference between a narrow rally and a broad one are better positioned to navigate what comes next.
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