AI trade enters mid-cycle slowdown
The AI investment theme is transitioning from a rapid expansion phase to a mid-cycle slowdown characterized by decelerating earnings growth rates and deleveraging.
The argument
The guest argued that many AI and semiconductor names have already priced in the next two years of growth after massive multi-bagger runs. He compared the current phase to Nvidia's post-June 2024 period, where earnings continued to grow but stock returns moderated as year-over-year growth rates decelerated from triple digits to double digits.
The thesis, stress-tested
✓ What validates it
- ✓AI names stabilizing and forming a bottom near their 200-day moving averages
- ✓Upcoming quarterly earnings reports showing smaller beat-and-raise margins
▸ Risks discussed
- ▸High volatility triggers systematic risk-parity and quant fund selling
- ▸Margin account liquidations accelerate downside momentum
Hear it yourself
"In this conversation, we talk about all the deleveraging happening in the stock market, why the mid cycle slowdown in AI may be impacting your portfolio. We also get into what's going on with inflation and Kevin Warsh's recent comments."
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