Industrials trade like semiconductor stocks
The speakers highlighted that the AI data center build-out has transformed the order books of major industrial companies, causing them to trade in high correlation with semiconductor equities.
The argument
They discussed research showing that 15 non-tech companies, primarily industrials, now have a 0.5 or higher correlation with the SMH semiconductor ETF. These companies provide critical physical infrastructure like backup generators, cooling systems, and electrical components to hyperscalers.
The thesis, stress-tested
✓ What validates it
- ✓Industrial companies reporting accelerating backlogs and order books specifically tied to data center customers
- ✓Sustained high correlation between the SMH ETF and the named industrial stocks
▸ Risks discussed
- ▸A sudden slowdown or pause in hyperscaler capital expenditure plans
- ▸Supply chain bottlenecks in electrical components delaying data center projects
Hear it yourself
"have, like, so much, discretionary spending is actually a pretty solid maybe it's for the upper income part of distribution, but it's still, like, it's a go go time in terms of consumer spending. That may not be backed up by all of the sort of job market itself, but it's good enough at the higher end for Knicks tickets. Right? I think that that but the higher end or the bigger shape of the k is, like, a very big it's big. Because if how is it getting priced $7,000? I don't understand. Like, literally, where is are people just throwing on their credit cards and saying, like, whatever? Like Well, New York City isn't real life."
04:50
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE