Broken Moats
Family-Office Long/Short Research, Variant Perception
Fidelity National Information Services is a good deep-value opportunity at current prices. The gap between momentum semiconductor and capex names and the AI 'losers' and mega-cap tech looks stretched, and a rotation seems near, whether from selling the news on Micron's earnings or quarter-end rebalancing, even if it is short-lived and volatile. x.comÂ
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.comÂ
Slowing AI capital spending keeps the semiconductor growth scare in play. Meta's cash flow is negative and Lam Research's capex is slowing, further evidence as the sector faces a growth-to-value rotation and a Fed pause next week. 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
AI-related numbers will prove effectively made up, setting up a 'biblical' rotation out of semiconductor stocks (SOXX) by the time it is done. Confidence that the capex bubble has burst is high. x.comÂ
Semiconductors are more likely to go up than down from here at current valuations, since 2028 is probably a 20-30% capex growth year. AI capabilities and model revenue are ramping at an unprecedented pace and chip spending drives earnings growth for the whole market, while multiples stay reasonable on cyclical fears. The risk: model revenue added about $170 billion in 2026 against $780 billion of capex, and if capex flattens after an expected $1.1 trillion in 2027, multiples may stay low. x.comÂ
Semiconductors still look likely to lag on a risk-adjusted basis, even if Treasury intervention such as yield-curve control changes the broader picture. They should have been rallying hard this week and are not acting right for bulls, suggesting something is brewing, probably a capex disappointment. Hyperscalers may be closer to another leg up. x.com x.com x.comÂ
Flex, memory chips and Lam Research are high-conviction AI plays worth buying on every dip and holding long term, because most major analysts project roughly 25-35% compound annual growth for the AI market over the next decade. x.comÂ
Micron is one of only three memory makers, and high-bandwidth memory for AI accelerators is the move. x.comÂ
Semiconductors are the cheapest layer of the AI trade yet have the fastest earnings growth, so the AI bubble debate misses the point. Semis trade at 17.8x while software, up only 2%, trades at 25x. The market isn't pricing AI; it's pricing who keeps the margin. x.comÂ
Micron, Credo and Sivers Semiconductors remain undervalued for this AI cycle. Even where growth looks priced in, the pace of the AI boom should make today's prices look cheap within a few months. x.com x.comÂ
