AI hardware trade shifts from memory to optical
The guest argued that the AI memory trade is overextended and due for a correction, while optical and specialized networking components present better risk-reward over the next two years.
The argument
The guest noted that memory names like Micron, Seagate, and Western Digital have run up four to eight times over the past year, signaling that the acceleration phase is priced in. In contrast, optical-focused names like Marvell and Corning are earlier in their cycles and supported by massive structural demand.
The thesis, stress-tested
✓ What validates it
- ✓Marvell showing accelerated revenue growth in optical segments in upcoming quarters
- ✓A pullback or consolidation in major memory stock prices
▸ Risks discussed
- ▸Retail investor crowding in newly launched ETFs
- ▸Potential for competitors or Chinese domestic supply to catch up in memory efficiency
- ▸Broader market correction taking air out of the AI bubble
Hear it yourself
"So you've gotten to know me. I mean, I do a video each week. It's all facts. The facts are when the street was closed, ships are still not going through. So, we can play woulda, coulda, shoulda, maybe, this, that. If they did reopen it and it lasted for a month, I I think when you get into these situations with the market, it's very clear to me that, number one, the earnings, blew away expectations in a way that we've never seen before. So it's justified for the market to go higher. The facts of the matter are that we have a problem where energy prices are significantly higher than they were."
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