AI trade enters volatile mid-cycle slowdown
The guest argued that the 'easy money' phase of the AI infrastructure trade is over, ushering in a wider-range, highly volatile consolidation period.
The argument
The guest explained that headwinds such as government intervention, data center power constraints, and investor pushback on massive CapEx are slowing down infrastructure names. While the long-term five-year outlook remains strong due to an insatiable demand for compute, near-term expectations must adjust as stocks like Micron consolidate toward their moving averages.
The thesis, stress-tested
✓ What validates it
- ✓Semiconductor names like Micron testing and holding their 50-day moving averages
- ✓Enterprise adoption shifting measurably toward ROI-generating agentic AI systems
▸ Risks discussed
- ▸Sharp 20% to 30% corrections in high-flying semiconductor names
- ▸Increased regulatory and political interference in AI model development
- ▸Severe bottlenecks in power generation and data center construction
Hear it yourself
"But I I think that the basement trade, unwind, there is a direct relationship here between something we talked about a lot and something I was concerned about for really the last five, six weeks, but then last week talked about that I'm not as concerned about anymore, was this inflation uptick, particularly in core PCE, core CPI with energy going higher. Well, obviously, energy prices have collapsed. We've seen fertilizer. So you're gonna get a negative CPI print most likely for the June number. Already for July, we have a negative number."
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