Veteran Investor Eddie Ghabour Says the Fed Made a Mistake, Warns on AI Debt and Lays Out His 2027 Playbook

Eddie Ghabour, co-founder and CEO of KEY Advisors Wealth Management, joined Phil Rosen on Full Signal to discuss the Fed's rate path, stress in AI debt markets and his highest-conviction ideas for 2027.

Ghabour expects one more push higher in tech before year-end, then plans to lean on cybersecurity, healthcare, housing, utilities and gold as he expects the tech trade to take a breather next year.

Speaking before the Fed's October 28 decision, Ghabour said another rate hike would likely push his firm to "go full on defense." He argued the bond market has already done much of the Fed's tightening.

"I think they made a big mistake raising rates in September," he said. He also called the Fed's 2% inflation target "an arbitrary number."

In his view, AI is inflationary at first because of the buildout, before productivity gains bring inflation down. Warren Pies of 3Fourteen Research also weighed in on the Fed hike and the AI trade in an earlier Full Signal episode.

"I've always said the bond market is smarter than the stock market," Ghabour said. He sees the debt markets as the biggest threat to the bull market.

He pointed to CoreWeave, whose bonds he said are being priced at stress-level yields in the secondary market. His worry is that the strain spreads to bigger names like Oracle and high-yield spreads keep widening, which he would read as a risk-off sign.

Rosen noted that Amazon and Google are turning to debt markets to fund AI projects. Ghabour called it a red flag and said companies could hit a capital wall, probably within the next 12 months.

He compared the setup to the dot-com era. "There will be companies right now that cease to exist," he said, even as he called AI transformational.

Ghabour's firm bought Micron, Marvell, SMH, SOXX and XLK during the July chip sell-off. He still sees "one more big potential move up between now and the end of the year," and after that plans to scale back the concentrated tech bet.

Rosen asked about the iShares MSCI South Korea ETF (EWY), which slid in October. Ghabour agreed it trades as a Micron-related play and said that, with sentiment so bearish, it could bounce faster than other areas before December.

"Whether the debt markets get worse or not, companies are going to invest in cybersecurity," Ghabour said. His firm uses CrowdStrike and the Global X Cybersecurity ETF (BUG), which holds names like CrowdStrike and Palo Alto.

Rosen noted CrowdStrike has more than doubled in 2026, and said AI agents create a massive security threat.

Healthcare "checks off multiple boxes," Ghabour said, because it is defensive and can still benefit from AI. He pairs the XLV ETF with individual stocks to smooth out volatility.

Ghabour called housing "a real contrarian call for next year." He expects Fed hikes to slow growth and pull long-term yields lower in 2027, helping rate-sensitive assets.

Housing has been "left for dead the last few years," he said. He favors homebuilders, including the iShares U.S. Home Construction ETF (ITB), especially if the Fed hikes again in December.

Utilities fit his defensive 2027 playbook because they are rate-sensitive, and AI data centers add natural demand for power. "You can hedge AI with utilities, but then you can also play AI with utilities," Rosen said.

Ghabour expects gold to be "a very sizable position" next year. His firm has held as much as 20% in gold for some clients and could go as high as 20% to 25%, citing heavy central bank buying.

"It could generate a tremendous amount of alpha in our opinion in 2027," he said.

Ghabour believes "since COVID the market structure has changed and it has changed forever," so part of a portfolio should be tactical alongside buy-and-hold. "You can time economic cycles and trends when they're happening," he said.

Tune in to the full conversation with Eddie Ghabour on YouTube, Spotify and Apple Podcasts.

For more on AI debt, read Goldman Sachs Investment Chief Alexandra Wilson-Elizondo on the AI Debt Boom, Bubble Fears and Where to Invest in 2027, and subscribe to the free Opening Bell Daily newsletter for a daily briefing on stocks, macro and Wall Street.

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This article is for informational purposes only and is not investment advice. Views and stock opinions are those of Eddie Ghabour and market figures are as stated by the guest at the time of recording.