Long hardware, semis, and commodities over software
The guest argued that the AI build-out is a structural scarcity trade where investors should go long hardware, semiconductors, and commodities, while shorting software and private credit.
The argument
The guest asserted that artificial intelligence has made coding free and ubiquitous, allowing AI agents to create competitors in minutes. This is driving severe multiple compression and disruption across all software companies, while creating insatiable, unfulfilled demand for physical compute, optical fibers, and thermal cooling.
The thesis, stress-tested
✓ What validates it
- ✓Continued parabolic revenue run rates at private AI labs like Anthropic and OpenAI
- ✓Further downward revisions in software company multiples during upcoming earnings cycles
▸ Risks discussed
- ▸High capital expenditure by hyperscalers is turning their free cash flows negative
- ▸Potential macro or geopolitical shocks could disrupt hardware supply chains
Hear it yourself
"Everyone seems to be very excited that this thing is gonna be over. I think maybe you have a little bit more tempered expectation. What's going on right now? Well, I think rather than get into the focus of the direction, I think every week I say to people, this is gonna be a continuous year of rotation, just because of how mispositioned people are for artificial intelligence. So if you go back to the end of February, just before the war started, you know, everything that we talked about was hardware, semiconductors, and commodities on the long side, shortages, scarcity."
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