Dan Niles, founder & portfolio manager at Niles Investment Management, joins BNN Bloomberg to discuss the outlook on the markets.
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What Dan Niles said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
Dan Niles, founder and portfolio manager at Niles Investment Management, discussed the market rally since July 29, noting that technical indicators are not overbought and interest rates on 10-30 year Treasury yields are near 2007 highs. He expects choppier markets approaching US midterm elections and plans to become more conservative. He argued that stock picking will matter more due to headwinds like high oil prices and political divides. On software, he said Silver Lake's potential takeover of Workday could floor the sector, citing the size of the deal and Atlassian's earnings pop. In AI, he acknowledged price cuts from open-weight models but emphasized token volume growth, up 7x since late January, and noted agentic AI will need 10-100x more tokens. He favored Intel over Nvidia for its CPU-to-GPU ratio shift, advanced packaging, and US production, highlighting its September quarter EPS guidance 40% above expectations.
Key takeaways
Niles plans to become more conservative in the next week or two as midterm elections approach.
Silver Lake's potential Workday buyout could put a floor under software stocks.
Token production has increased about 7x since late January with the rise of agentic AI.
Intel is his favorite semiconductor name, with September quarter EPS guidance 40% above expectations.
Iran's complexity may keep oil prices above $80, creating volatility into midterms.
0:25So, if none of your technical indicators are flashing overbought, do you think the path of least resistance for the markets is still higher from here?
1:25And with such a strong and broad earnings beat from the S&P in the second quarter, why do you think stock picking will become more important for investors in the coming months?
2:38So, what do you think will trigger the next leg lower?
4:04How big of a threat do you think that really is?
5:18Like, could that shift consumer behavior away from standalone chatbots?
6:22What makes Intel, despite trading at a relatively high forward PE, more attractive to you than Nvidia, which you've described as both a value and a growth play?
We're going to move on though. Our next guest has been calling for a strong market rally back on July 29th, and it followed a sharp pullback that he said was not helping create a short-term bottom as forced liquidations at the Sitional Awareness Fund rattled stocks. Since then, the S&P has surged, hitting a new all-time high just yesterday. So, let's welcome in Dan Niles, founder and portfolio manager at Niles Investment Management. It's great to have you join us.
Yeah, I mean, we've obviously seen an incredible rally from that low on July 29th, and a lot of the sectors that got beat up the most. And but yeah, to your point, none of the technical indicators are flashing overbought. The market's been incredibly resilient also with the fact that interest rates for, you know, 10-30 year Treasury yields are near the highest levels since 2007.
And with the situation in Iran looking increasingly complex every day that passes. So, for right now, they say never short a dull market, and that's probably what you're in. But I got to believe that as we get closer to midterm elections in the US, that things get a lot choppier. So, for me, you know, I enjoyed this rally, but I'm certainly looking with one eye towards getting a lot more conservative coming up in the next week or two.
And with such a strong and broad earnings beat from the S&P in the second quarter, why do you think stock picking will become more important for investors in the coming months?
Well, because it's one of those things when stocks go straight down like they did from June 22nd through July 29th, like everything gets thrown out. And then when stocks will rip back higher like they did in tech from July 29th to today, everything sort of gets caught up in it. I think now you're in a more, you know, neutralish territory, and stock picking is going to become a lot more important because there's still a lot of headwinds, right? Oil's still in the 80s. It, you know, my belief is becoming increasingly so that Iran's not going to let us out of this situation until we get past the midterms, which is going to create a lot of volatility if oil stays up in this 80-plus dollar range. And so, I think going into the midterms, especially in the US where you have such a huge political divide between the social democrats, which are absolutely not friendly to big business, and they've been gaining a lot of seats as we saw in New York City, for example. I think that can create a lot of turbulence as you head towards that November 3rd midterms.
For sure. Okay, I wanted to also get your thoughts on reports that Silver Lake is considering taking over Workday. You said this could put a floor under the software sector for some time. So, what do you think will trigger the next leg lower?
Well, I don't. That's my point. So, I think it's going to put a floor underneath the software sector. You have to remember Workday, um, if they're going to get bought out, this would be one of the biggest buyouts we've seen since Electronic Arts was taken out at about 55 billion in market cap. Workday's right now right around that 50 billion or so range. And for a private equity firm to decide to buy a company, they typically use leverage. You don't have immediate liquidity, so it's not like you're investing in public stocks where you can get out. They usually have to hold on to an asset for 5 to 7 years. And so, then they have to feel comfortable that AI is not going to wipe out these companies over the course of the next 5 to 7 years, which is what everybody's been worried about. And the software ETF, IGV, is actually down a couple of percent year-to-date, while you've got the S&P up 14% and the semiconductor index up over 70%. So, that just shows you how beat up the software sector is. And I think this bid, combined with the fact that Atlassian was up about 35% when they reported, another name that was supposed to get wiped out by AI, you know, this puts a pretty strong floor underneath a lot of these software stocks.
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Niles, D. (2026, August 17). Has the software trade bottomed? [Interview transcript]. BNN Bloomberg. CEOInterviews.AI. https://ceointerviews.ai/interview/3126107/
MLA
Dan Niles. "Has the software trade bottomed?." BNN Bloomberg, 17 Aug. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/3126107/.
BibTeX
@misc{niles2026_3126107,
author = {Dan Niles},
title = {Has the software trade bottomed?},
howpublished = {Interview transcript, BNN Bloomberg. CEOInterviews.AI},
year = {2026},
month = {aug},
url = {https://ceointerviews.ai/interview/3126107/},
note = {Speaker-attributed transcript with timestamps}
}
