NeutralAMDWTICLWTI Crude OilWTI Crude OilCSCOCiscoCiscoINTCIntelIntelMUMicron TechnologyMicron TechnologyNBISNebius Group N.V.Nebius Group N.V.NVDANVIDIANVIDIA

3d ago on

I'm a perma-bull. I've always believed that over the long run, it pays better to be bullish than bearish. And I still believe that. But looking at the AI infrastructure investment boom over the past couple of years, I'm seeing a lot of copium, wishful thinking, and people selectively using evidence to justify positions they already hold. Every positive development confirms the thesis. Every negative development gets explained away. There are quite a few things genuinely worrying me right now. Oil prices remain elevated, even after the recent decline. Historically, sharp oil price increases have preceded or accompanied several US recessions. That doesn't mean another recession is inevitable, but with the war in Iran still unresolved, dismissing the risk seems irresponsible. Financing is another concern. The cost of capital matters enormously, and I think we're going to see an even greater distinction between companies generating substantial free cash flow and those constantly needing external capital. Easy money is gone. Debt isn't cheap, dilution isn't harmless, and investors won't fund every ambitious project indefinitely. AI capex continues to grow at an extraordinary pace. But how long can that continue? Even the largest companies have financial limits. Some can fund their investments through enormous operating cash flows, while others increasingly depend on debt, equity issuance, and other financing arrangements. At some point, returns on those investments have to justify the spending. What happens if demand growth slows, utilization disappoints, or capital becomes harder to access? Cisco is an interesting historical example. In early 2001, Cisco reported 55% YoY revenue growth. Impressive, right? Unfortunately, Wall Street expected even more. The stock suffered, and the business subsequently experienced a dramatic slowdown. Being right about the internet didn't necessarily mean being right about internet stocks, their valuations, or their growth expectations. I think neoclouds deserve particular attention here. Some will probably do exceptionally well. But which ones can survive a prolonged period of difficult macro conditions? Which ones have sustainable economics, manageable debt, and sufficient liquidity? Which ones will face increasing competition from hyperscalers as those companies expand their own capacity? These are perfectly reasonable questions. Yet I increasingly see people treating any cautious or bearish argument as an attack on their investments. Some investors seem almost incapable of moving away from a stock they have defended for months or years. When every piece of evidence has to support your existing thesis, you're no longer evaluating the investment objectively. Sunk-cost bias and emotional attachment can become very expensive. I believe AI will be one of the most revolutionary technologies we've ever developed. I also believe the infrastructure buildout will continue for years. But that doesn't guarantee uninterrupted growth, healthy returns for every participant, or ever-increasing stock prices. AI investment has become a major contributor to US economic growth. That also creates vulnerability. A substantial slowdown in infrastructure spending could have consequences well beyond the companies building data centers, particularly if the broader economy is already struggling. And the macro backdrop isn't particularly encouraging. We still have elevated energy prices, persistent inflation, expensive financing, and considerable geopolitical uncertainty. Markets are pricing in another Fed hike in December, and further tightening next year remains possible depending on inflation and how the war develops. I'd love to see the conflict de-escalate, energy prices normalize, and financing conditions improve. But I can't base my investment decisions on hoping that everything works out. None of this makes me bearish on the long-term future. I'm still extremely bullish on AI, the companies enabling it, and equities in general. I expect enormous opportunities over the next decade. I also expect some brutal corrections, disappointing investments, and companies that won't survive the journey. I'm perfectly comfortable being cautious in the short term while remaining very bullish long term. And I think asking difficult questions today is something we all should do regularly. $CSCO $NBIS $NVDA $AMD $INTC $MU $SKHY - TheBigBearbowski

NeutralAMD000660SK hynixSK hynixAAOIApplied Optoelectronics, Inc.Applied Optoelectronics, Inc.ALABAstera LabsAstera LabsANETArista NetworksArista NetworksAVGOBroadcomBroadcomCOHRCoherent Corp.Coherent Corp.CRDOCredo Technology Group HoldingCredo Technology Group HoldingDRAMRoundhill Memory ETFRoundhill Memory ETFEMEEMCOR GroupEMCOR GroupETNEaton Corporation plcEaton Corporation plcFIXComfort Systems USAComfort Systems USALITELumentum Holdings Inc.Lumentum Holdings Inc.MODModine ManufacturingModine ManufacturingMRVLMarvellMarvellMUMicron TechnologyMicron TechnologyNVDANVIDIANVIDIAPWRQuanta ServicesQuanta ServicesSNDKSandisk CorporationSandisk CorporationVRTVertiv Holdings, LLCVertiv Holdings, LLCWDCWestern Digital CorporationWestern Digital Corporation

6d ago on

AI bears are in full swing. I keep seeing people argue that "AI isn't an investment, it's a trade." I strongly disagree. As long as demand persists and the economics make sense, the buildout will continue. If not in one state, then another. If not in the US, then Mexico. If not on Earth, then space. And that last part isn't even a joke anymore. Elon Musk is seriously pursuing orbital data centers. The point is, hyperscalers will keep looking for places to build as long as there's demand and money to be made. Geography, regulations and power availability might change where those facilities are built, but the demand for compute isn't tied to one particular location. Data centers don't just disappear once they're built. They'll need maintenance, upgrades, replacements, new GPUs, more DRAM, networking equipment, storage, cooling and power infrastructure. Then there's sovereign AI, enterprise adoption, new applications and technologies we probably haven't even thought about yet. Will the spending slow down? Absolutely. At some point it will, and some companies will get hurt badly. Some projects won't generate acceptable returns, and some businesses will disappear entirely. But I don't believe AI infrastructure spending is some temporary phenomenon that suddenly ends when this initial buildout is complete. The real challenge, in my view, is figuring out which companies will benefit from all that hyperscaler capex, how much of it they can actually capture, and whether they'll generate attractive returns for shareholders. Because a company can be operating in the right industry, experiencing enormous demand, and still turn out to be a terrible investment. That's where I think investors should spend more time looking. Here are 20 companies I'd watch across the AI infrastructure supply chain: 🖥️ Compute & AI accelerators $NVDA — NVIDIA $AMD — Advanced Micro Devices $AVGO — Broadcom 💾 Memory & Storage $MU — Micron $SKHY — SK Hynix $STX — Seagate $WDC — Western Digital $SNDK — Sandisk 🌐 Networking & Connectivity $ANET — Arista Networks $CRDO — Credo Technology $ALAB — Astera Labs $MRVL — Marvell Technology 🔦 Optical Components $LITE — Lumentum $COHR — Coherent $AAOI — Applied Optoelectronics ⚡ Power & Cooling $VRT — Vertiv $ETN — Eaton $MOD — Modine 🏗️ Construction & Electrical Infrastructure $PWR — Quanta Services $EME — EMCOR $FIX — Comfort Systems USA and many others. Can't possibly fit them all here.