Semiconductor momentum trade faces cyclical reversion
The guest argued that the massive revenue growth in semiconductors is unsustainable due to the law of large numbers and the highly cyclical nature of the industry.
The argument
Lance Roberts explained that current parabolic moves are driven by chasing momentum, but high prices will inevitably incentivize increased supply and new competition. Once supply catches up with demand, a significant price reversion is expected, prompting capital to rotate back into stable growers like the Megacap Seven.
The thesis, stress-tested
✓ What validates it
- ✓Deceleration in Micron's year-over-year revenue growth
- ✓Industry reports showing rising semiconductor inventory levels
▸ Risks discussed
- ▸Momentum chasing could extend the trade longer than fundamentals justify
- ▸AI demand could remain structurally elevated for longer than historical cycles
Hear it yourself
"I'm wearing a new jacket today. The, jacket I normally wear, folks, long term viewers may remember, it's got a special story behind it. It's the jacket that I wore as a young junior investment banking analyst back in the early nineties, on Wall Street when I started my career there. I, you know, had to wear it on Wall Street's terms back then, which is the reason why I wear it now. I wear it now on my terms for thoughtful money. And, it's an older jacket. So it started getting a little bit worse for wear. Liner was starting to come out."
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE