The three major indexes (^DJI,^GSPC, ^IXIC) closed lower on Thursday after another hot inflation print. U.S. Bank Asset Management Group Chief Investment Officer Eric Freedman joins Yahoo Finance Live to provide insight into the market action.

Addressing the AI industry, Freedman notes "a really tight supply" in AI services, stating that producers cannot get their products to market fast enough to meet the soaring demand. He further emphasizes that demand will remain steady as companies invest in becoming "bigger, stronger, faster" through the implementation of technology to increase efficiencies.

Expressing optimism, Freedman declares "there is room to run" for stocks and with the Federal Reserve's anticipated rate cuts on the horizon, he views this as "a good opportunity to stay involved or get involved if you're not involved."

Regarding the Chinese markets, Freedman acknowledges their upward trajectory, stating, "it's been down so much," and deems the "consolidation makes sense," despite the less-than-favorable data coming from the region.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

JOSH LIPTON: Meanwhile, the markets under pressure today, but year to date we've seen all three major indexes reach record levels with the S&P already blowing past some Street estimates. Thanks to a solid earnings quarter and the AI rally, there's been talk of a bubble we know popping at some point. But our next guest believes there's still more room to run.

Eric Freedman is the US Bank Asset Management Group's CIO. Eric, it's good to have you on the show. So maybe we just start there because that's certainly a question that's been raised, Eric. People, they've been looking at NVIDIA and this AI rally and hearing these questions. Maybe we're seeing a bubble, but you don't think that. Things don't look bubbly to you.

ERIC FREEDMAN: They don't. And Josh, thanks so much for having us on. Look, as someone who lived in San Francisco during the dotcom rise and fall, maybe I'm a bit jaded by what a real bubble looks like. We think there's just a really tight supply of services in AI right now.

Specifically, if you look at the core producers, the OEMs, if you will, they just can't get product out fast enough. And so we do think that demand will be steady. And if you also look at what backs up this AI move, it is continued corporate CapEx. Companies are looking at bigger, stronger, faster. They're not doing that through hiring more people.

They're doing that through technology spend. So again, as you have constrained supply with still very steady demand, we think there's going to be an ongoing bid there. And we would-- there are lots of things to fight in global macro. That's not one thing that we would pick a fight with right now.

JULIE HYMAN: And so not picking a fight and, sort of, investing more in it are two different things, right? So would you put more money to work in that theme right now?

ERIC FREEDMAN: Yeah, Julie. I think as things settle back and if we do see a retrenchment, even all the areas that you've talked about, whether that's equal weight or small cap or certainly AI space, we think there is room to run. So this is very much an interest-rate driven story in the near term.

And we have right now in front of us a really important tactical level. [? Shannon ?] did a nice job of covering this in the prior segment. But as we get closer to 435 in the 10-year, that begets 4 and 1/2%. 4 and 1/2% is a very, very key level for both the Fed to issue more concrete guidance. We'll certainly get those dot plots next week. But we do think that with more moderating interest rates and the bias for the Fed to cut back, we think that sets up a good opportunity to get to stay involved or get involved if you're not involved.

JOSH LIPTON: And Eric, for equity investors listening right now, I know you favor it looks like domestic over international. Sound a bit nervous there, Eric, as a lot of people are about China? I've seen some strategists on China, Eric, that kind of push back on that. I know kind of contrarian call, but they say valuation now looking attractive. But you don't see that.

ERIC FREEDMAN: You know, China has been a great excess return source for us for several months. And anytime you're underweight something, you have to have some nervousness attached to it. That's really where we are right now.

There's not a great fundamental reason beyond a ton of liquidity injections from the central government. The property market is still upside down. You look at where core demand is from a consumer standpoint, it's just not there.

So the reason that China is really moving up is because really just because it's been down so much. I mean when you're down 40%, 45%, which again has been great to be underweight, there may be a bit of a reflexive move higher. So again, it's an area where the information is not great coming from China.

But the fact that you've had just such a move lower, probably a little bit of a consolidation makes sense. We'd still remain underweight. We think there are other opportunities out there and not a great fundamental story for some time in China.