Gabz
Stock & Crypto Trader, SuperTrend Indicator Owner
Technology, semiconductor and software stocks are backed by earnings estimates that kept climbing even during April's AI-infrastructure crash. Prices fell below their starting level for the year as many called the AI trade dead, but the business never weakened, and six weeks later prices were at new highs. Fundamentals, not price swings, drive the trade. x.comÂ
Hyperscalers' forward P/E has contracted 20% even as estimates ramped, making it rare to see things get much worse. Rising GPU rents and new lows in availability make the AI fears a fade; hyperscalers should lead. The next two weeks will be gut-wrenching amid the OpenAI raise, Anthropic S-1, Fed, midterms and mutual-fund selling into year-end, but that is the time to buy. x.comÂ
Apple's roughly 35x forward earnings premium looks unsustainable. If fear around the AI trade fades, its gains could stall or reverse. x.com x.comÂ
AI semiconductor stocks are falling because valuations priced in too much growth beyond 2026-27, not because fundamentals are worsening. With the sector ETF up more than 100% year to date at one point, Q2 earnings couldn't meet those expectations, and a crowded trade is deleveraging as everyone races for the same exit. Fundamentals are likely improving, so as positioning and valuation reset the trade can continue, but selectively. x.comÂ
Debt-funded AI building is making tech stocks vulnerable to a 25-30% pullback as rates and energy prices rise. AI company borrowing reached $466B this year versus $101B a year earlier; weekly default-insurance trading on seven AI names rose from under $2B in July to over $9B in September. Keep cash for lower prices, though 30% earnings growth and a 19x market multiple argue this is not an AI bubble. x.comÂ
Inflation and interest-rate fears, not an AI slowdown, are driving the selloff in AI stocks. The market and Fed are reacting wrongly to AI's rapid growth and value creation. Apart from year-end tax-loss harvesting, there is no reason to sell; this should pass and holders should come out stronger than ever. x.com x.comÂ
Semiconductor stocks' easy-money phase is over as the sector shifts from hype to show-me-the-money. The SOX index is down over 15% from its June peak, chip funds saw $11B of outflows in one week, the largest this century, short interest is at a three-year high and earnings growth is projected to slow by 2027. Memory and logic chips remain commodity-like. This is cyclical cooling, not a death knell; the AI build-out continues, but expect more turbulence and favor companies with defensive moats. … Show more
Demand for compute remains strong and the AI investment cycle is still running, so the underlying AI opportunity has not changed. But if wars keep inflation high and rates stay higher for longer, even great businesses will see their multiples compressed, damaging the AI trade without necessarily invalidating it. The S&P 500 forward P/E has fallen from 23.2x to 18.7x, a roughly 5.35% earnings yield versus 5.47% on the 20-year Treasury; how long this backdrop lasts is unknowable. x.comÂ
AI-exposed semiconductors face near-term demand risk as Anthropic's revenue growth slows. Monthly additions fell from $10B to ~$2-3B, though October may improve and one-off headwinds contributed. The AI selloff is not irrational amid rates, debt, politics and supply-chain risks. Despite long-term optimism, a short-term bull case needs an Anthropic IPO or OpenAI fundraise, calmer rates and debt funding, blowout cloud earnings with EPS upgrades, and new applications reviving token monetization. … Show more
Strong AI demand and hyperscaler spending make the selloff a mid-cycle correction despite neocloud financing stress. Widening CCC spreads expose leveraged firms to higher borrowing costs; US competition with China supports AI buildout. The base case is a bottom in roughly 5-7 days, then stabilization and eventually a broader reversal, though some projects may fail and valuations compress. IREN, Cipher, Nebius, Applied Digital, Micron, AMD, ASML and Intel are worth gradually accumulating. x.comÂ
Technology stocks are backed by AI fundamentals strong enough that being bearish is the wrong side. Hedge funds are buying US tech at the fastest rate since mid-2025, and Intel's CEO says memory prices have risen over 5x with the shortage worsening in 2027. AI token usage is up about 2,400% a year, with Goldman Sachs expecting 24x more by 2030. Nebius is raising GPU prices about 20%, Broadcom expects AI revenue to double in FY27 and FY28, and GPU depreciation is far milder than bears forecast. … Show more
