THE AI TRADE WORSENS

We know what you have been hearing. It’s just a correction. Everything is fine. AI is huge. AI is going to take over. AI spending is enormous going forward. Stay the course. Only one problem. The market has been thinking differently.

The AI trade just keeps worsening. The real top was that fateful “deepseek” Monday on January 27. We again were told not to worry. Many came out to defend. Only one problem again. After a brief rebound, the whole complex gagged as it topped out mid-February with the rest of the market.

We have been worried about all the spending noise. How can there be any return on investment with such numbers?  What about over-ordering of the chips? What about others coming out with cheaper chips? Again, we have been told not to worry. Again, the market has been thinking differently.

We are now hearing  rumblings of “less!” Less in data centers. Less in orders. We are just wondering what comes next? If this whole complex continues down, we gather we will hear some more. Chips, data centers, construction of those data centers, energy for those data centers are all being clipped. Before the top, they were quite the strong. Institutions are now wanting less and less of these areas. The problem is they were neck deep in shares.

The semis…been in a bear market. The data centers…been in a bear market. The energy…been in a bear market. The construction…been in a bear market. As we write this, every chance things are worsening as favored names BROADCOM (AVGO) breaking into new relative lows below the 200 day moving average and the almighty NVIDIA (NVDA) can’t get out of its own way and is actually down over 20% from LAST JUNE and about 26% from recent highs.

Wish we had better news but we deal in real time and we deal in reality. If anything changes, we will quickly let you know but continually and today…ugh!

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