AI Momentum Outweighs Iran Risks and Fed Concerns, Says Chief Economist

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Stephanie Roth, chief economist at Wolfe Research, argued on a CNBC Morning Call that the AI capex cycle has runway, geopolitical risk is being absorbed by the stock market, and the Federal Reserve can stay patient despite sticky inflation. Her view sets the tone for a week hinging on Micron Technology (NASDAQ:MU) earnings, Iran negotiations, and Fed signaling.

“There is a lot of exuberance. There’s a lot of capital that wants to find the trades that are going to be setting the tone for the next decade and decades to come. Our expectation is the AI trade can continue for a while longer. There are no signs right now that it’s entered any sort of bubble,” Roth said. She framed AI enthusiasm as backed by structural demand rather than speculation, pointing to a historic shift in capital allocation where companies, including SpaceX, are raising capital instead of buying back shares, signaling conviction in long-term tech investment.

Why Micron’s Earnings Will Be This Week’s Highlight

Gina Sanchez, chief market strategist on the same panel, called Micron the most important name on the calendar. “This week, Micron matters more. Micron makes high-bandwidth memory chips. And those are extremely important not only for AI training but also for inferencing, which is really where AI has gone,” she said. Micron reports fiscal Q3 2026 results on Wednesday, June 24, after the market closes.

Micron’s prior quarter delivered revenue of $23.86 billion, beating consensus by 22.28%, with non-GAAP EPS of $12.20 against a $8.73 estimate. Cloud Memory revenue hit $7.75 billion, and management guided next-quarter revenue to $33.5 billion with gross margins near 81%. CEO Sanjay Mehrotra told investors, “In the AI era, memory has become a strategic asset for our customers,” as he announced a 30% dividend increase to $0.15 per share.

The stock has reflected the rerating. MU traded at $1,133.99 as of June 18, up 13.87% over the prior week and 297.5% year-to-date. Polymarket traders are pricing a 97.35% probability of another earnings beat. The shares carry a forward P/E multiple of 11x, capturing the debate between durable AI demand and cyclical memory pricing.

Iran Risk Repriced

Michelle Caruso-Cabrera argued geopolitical shocks have largely failed to send equities lower. “Even with the major disruption in oil that we saw, you know, the market ended up shrugging it off. As long as these talks make some progress, I think there’s going to be good enough for the equity market,” she said. The panel characterized Iran talks as moving in the right direction, but still weeks to months from insurance reinstatement.

WTI crude traded at $84.65 per barrel as of June 15, down 22.3% over the prior month from a May peak above $112, consistent with the view that risk premiums are unwinding rather than building.

The Fed’s Patience Test

Roth is watching inflation closely under the panel’s new chair, Kevin Warsh. “We’re looking for 0.38% on core, which is roughly double what the FED would really like to see. Our expectation is that the FED will not ultimately hike interest rates, although they will certainly be talking about it very much at the July meeting,” she said. She expects transitory factors, including Iran-related energy costs and World Cup travel, to fade.

The latest core PCE index reading was 129.63 in April 2026, sitting in the 90.9th percentile of the trailing 12-month range.

What To Watch

The panel flagged a pro-business candidate’s victory in the Colombian runoff election as part of a broader Latin American shift toward free-market policies. For investors, the through-line is that AI capex, anchored by Micron’s high-bandwidth memory franchise, is the dominant variable this week. Iran headlines and Fed commentary matter, but neither has the weight to override an earnings cycle running at the magnitudes Micron has been delivering.

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