KKM Financial's Jeff Kilburg Warns Against Shorting AI Stocks Amid Market Volatility

This analysis is based on the CNBC Power Lunch segment [1] published on November 4, 2025, featuring KKM Financial’s Jeff Kilburg and Susquehanna’s Chris Murphy discussing market conditions affecting AI investments.

Jeff Kilburg’s warning against shorting AI stocks came at a critical juncture when the technology sector was experiencing notable weakness. On November 4, 2025, major AI leaders faced significant pressure: NVIDIA closed at $198.69 (-3.96%) and Palantir at $190.73 (-7.94%) [0]. The broader Technology sector declined 0.49%, while the NASDAQ Composite fell 0.44% to 23,355.78 [0]. However, this short-term weakness contrasts sharply with longer-term performance trends, with NVIDIA up 43.66% year-to-date and Palantir showing remarkable 153.66% YTD gains [0].

The market data reveals a compelling divergence between daily price action and underlying fundamentals. NVIDIA maintains exceptional profitability metrics with a 52.41% net profit margin and 83.86% ROE, supported by dominant market position in AI chips with 88.3% revenue concentration in Data Center segment ($115.19B in FY2025) [0]. Palantir’s recent earnings beat expectations with EPS of $0.21 and revenue of $1.18B [0], demonstrating continued operational execution despite premium valuations.

Market sentiment data indicates strong institutional backing for AI leaders. NVIDIA maintains a Strong BUY consensus with 73.4% of analysts rating it as Buy [0], supported by recent Buy rating maintenance from major firms including Goldman Sachs, Rosenblatt, and Loop Capital [0]. This institutional confidence aligns with Kilburg’s warning, suggesting that professional market participants view current weakness as temporary rather than indicative of fundamental deterioration.

The AI sector presents a complex valuation landscape. While Palantir trades at an elevated P/E ratio of 411.59x and NVIDIA at 55.91x [0], these premiums reflect market expectations of sustained growth in AI adoption. Kilburg’s warning suggests that despite these high valuations, the growth trajectory remains intact, making short positions particularly risky given the potential for continued expansion in AI infrastructure spending.

The AI investment thesis remains heavily concentrated in large-cap leaders, creating both opportunity and risk. NVIDIA’s $4.84 trillion market capitalization [0] represents significant market power, while Palantir’s 360.58% gain over the past year [0] demonstrates the explosive potential of AI-focused business models. This concentration suggests that shorting AI stocks essentially bets against continued technological advancement and enterprise AI adoption trends.

The November 4th market action showed defensive sectors outperforming, with Consumer Defensive (+0.64%) and Basic Materials (+0.32%) showing relative strength [0]. However, this appears to represent typical sector rotation rather than a fundamental AI rejection. Kilburg’s commentary implies that such rotations create entry opportunities rather than validation of short theses.

: High P/E ratios across AI leaders suggest significant growth expectations are already priced in. Any disappointment in earnings delivery or growth deceleration could trigger sharp corrections [0].

: The AI trade remains heavily concentrated in few large-cap names, creating vulnerability to company-specific issues or competitive disruptions.

: Increasing regulatory scrutiny around AI technologies could impact growth trajectories and market valuations.

: Current weakness may represent buying opportunities for long-term AI exposure, particularly in fundamentally strong companies with competitive moats.

: Hyperscaler capital expenditure trends suggest sustained demand for AI infrastructure, supporting companies like NVIDIA [0].

: New AI product launches and technological breakthroughs could catalyze next leg of AI sector expansion.

Decision-makers should track earnings delivery consistency, capital expenditure trends from major tech companies, regulatory developments, and competitive dynamics within the AI sector [0].

Jeff Kilburg’s warning against shorting AI stocks reflects broader market dynamics where short-term volatility contrasts with strong fundamental performance. Major AI stocks like NVIDIA and Palantir experienced significant daily declines on November 4th but maintain impressive year-to-date gains of 43.66% and 153.66% respectively [0]. The technology sector’s underperformance (-0.49%) appears to represent typical market rotation rather than fundamental AI sector deterioration [0].

NVIDIA’s dominant position with 88.3% revenue concentration in Data Center segment ($115.19B FY2025) and exceptional profitability metrics (52.41% net margin, 83.86% ROE) [0] supports the thesis that AI leaders maintain strong competitive advantages. Similarly, Palantir’s recent earnings beat and 360.58% one-year performance [0] demonstrate continued operational execution despite premium valuations.

The market maintains Strong BUY consensus on NVIDIA (73.4% analyst ratings) [0], indicating institutional confidence that aligns with Kilburg’s cautionary stance against short positions. While valuation concerns exist with P/E ratios of 55.91x (NVIDIA) and 411.59x (Palantir) [0], these premiums reflect market expectations of sustained AI adoption and growth.

Current market conditions suggest that while short-term timing risk remains elevated, the fundamental AI investment thesis appears intact, making short positions particularly risky given the potential for continued technological advancement and enterprise adoption.