Some semiconductor stocks have returned to reasonable valuations as fundamentals improve, making recent declines buying opportunities. Many had traded at two to three times their median valuations; the correction brought some back toward normal, while sustained AI spending should benefit suppliers for years. x.com 

Korean equities have a central role in the AI trade because Samsung and SK hynix supply most of the memory it needs. Despite the shakeout, the KOSPI leads the major markets shown at roughly +36% this year. The bullish lean faces a flow warning: Korean semiconductor ETF 20-day flows fell from nearly +$4B in June to about -$703M by October 18 as the index approaches rising support. x.com  x.com  x.com  x.com  x.com 

Semiconductors look set to outperform software. Hedge funds are simultaneously the most overweight semis and most underweight software in a decade, and last year's compression in software valuations made that signal impossible to ignore. Within chips, photonics, memory and CPUs are the favored areas. x.com 

Semiconductors could stay undersupplied for a long time as more capable AI per dollar creates more uses and drives compute demand. Micron and NVIDIA trade at low forward P/Es because investors fear peak cyclical earnings, yet current earnings show no slowdown. Shortages may worsen as AI adoption spreads, though the industry could remain cyclical; a reversal of the forced rollover trade is hoped for, not assured. x.com  x.com  x.com 

Semiconductors could capture scarce spot compute's value if its forward curve holds. Compute trades in deep contango, while chip stocks price in little of that value; near-term moves are unpredictable. That makes the sector very bullish. The earlier lab-funding risk looks less acute: Anthropic should hold nearly $200B cash after its IPO and is operating-cash-flow profitable. Even with 2029 capex cuts, chips look cheap if future buyers do not default. x.com  x.com  x.com  x.com  x.com 

Security software is arguably more of an AI bubble than semiconductors. Firms are bid up to nosebleed multiples on moderate AI-related revenue acceleration while facing medium- to long-term risks from Microsoft, Google and the AI labs and a 10-year Treasury yield above 5%. Their forward P/Es rest on non-GAAP earnings that exclude large stock compensation. A reversal could come from results missing high buy-side bars, security share gains by Microsoft or Google, or AI lab security launches. x.com  … Show more

Tech and semiconductor bounces are mainly driven by less urgent hedge-fund selling rather than fresh buying. Per Goldman Sachs, tech is still being sold amid very low activity; there is no sign risk has been added yet. The unwind may be nearing its end, especially as hyperscalers stick to capex plans and Q3 semiconductor earnings look likely to be positive. Less crowded positioning and more normal multiples leave a healthier base for a longer-term rebuild. x.com 

Cybersecurity stocks benefit as investors rotate toward the layers already monetizing AI and away from those still building the capacity to run it. CrowdStrike jumped 13.9% and led a cybersecurity rally while the whole semiconductor complex sold off on weekend calls to slow AI development. x.com 

High-quality software stocks such as ServiceNow, Cloudflare, Figma and Palantir look set to gain as money eventually rotates out of crowded semis, memory, data centers, AI infrastructure, space and defense. Software is underloved, and these names rose in sympathy with Snowflake's strong earnings, possibly the start of a rotation. The quiet third month of the quarter is a good time to position for gains into mid-July earnings, and insider buying is a signal worth following. x.com 

Software's relative strength and sound finances make institutional rotation from semis plausible. It could lead while semis consolidate, despite slow growth at some firms; the market rewards cash flow, healthy balance sheets and manageable debt. Salesforce, ServiceNow, Palantir, Shopify and Workday hold up; SAP's cloud and AI shift, Instacart's massive 10-month base, Veeva's massive five-year base and Atlassian's Stage 2 strength add to the case. Semis may still rally; the view can change. x.com  … Show more