AI CapEx shifts to physical infrastructure
The guest argued that the AI investment trade has transitioned from software to the physical infrastructure layer, specifically targeting semiconductors, memory, and hardware.
The argument
He noted that while software is lagging, hardware and memory names are experiencing insatiable demand. This shift is driven by massive hyperscaler CapEx backlogs, with companies focusing heavily on the physical layers of the AI stack.
The thesis, stress-tested
✓ What validates it
- ✓Hyperscalers reporting continued increases in their CapEx backlogs on earnings calls
- ✓Sustained revenue growth and high margins in semiconductor and memory companies
▸ Risks discussed
- ▸Potential short-term corrections of up to 40% in semiconductor stocks
- ▸Inventory build-up if physical deployment is delayed by external factors
Hear it yourself
"When you look at those data points out over the next twelve months, the numbers are bonkers. It suggests that we are likely to see a double digit return over the next twelve months from the stock market even though people are calling in a bubble and there's issues. What do you think is going on here, and why does the stock market keep going higher? The stock market is being driven by something that we talk about every single week. It's something we agreed was a good thing for us to do on here. Your fashion sense? Yes. Exactly. I mean, from my purple sweater out for the end of winter."
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE