Episode summary
Is the AI Trade Actually Over? Here's What the Selloff Really Means
Summary
The host argues the AI trade is not over despite the recent selloff in AI stocks, especially the infrastructure names that had surged earlier. He says the decline reflects short-term positioning and a lack of a current “master narrative,” not a deterioration in the underlying fundamentals. In his view, investors are overreacting to a normal shakeout in a fast-moving buildout story.
He remains bullish on AI compute, saying demand should outpace supply for years and that AI adoption is still under 10% of companies, leaving substantial room for growth. He also addresses concerns about “token maxing,” where firms clamp down on employee usage of models like OpenAI, Anthropic, and Gemini, but says that does not break the long-term thesis. He frames the AI rollout as a large infrastructure cycle with inevitable pullbacks along the way.
The host also points to projected hyperscaler capex of $800 billion in 2026, $1.2 trillion in 2027, and $1.4 trillion in 2028 as evidence that the spending cycle remains intact. He highlights five areas he likes after the selloff: AI infrastructure bottlenecks, the compute manufacturing ecosystem, select Chinese AI solution providers, energy security assets, and hyperscalers that can turn AI capex into cloud growth.
Key takeaways
- The host says the recent AI stock decline is mostly about short-term positioning, not weakening fundamentals.
- He argues AI compute demand will outpace supply for years and that adoption is still under 10%.
- He cites hyperscaler capex rising to $800 billion in 2026, $1.2 trillion in 2027, and $1.4 trillion in 2028.
- He says token maxing is a real concern, but it does not break the long-term AI buildout thesis.
- He sees opportunity in AI infrastructure bottlenecks, compute manufacturing, energy security assets, and hyperscalers.
- He suggests some AI names may be worth buying again after the recent pullback.
Notable quotes
“is the AI trade in aggregate over? Is the AI trade over? And the answer for me is clearly not”
“I view this recent decline as a matter of positioning really really short-term investor positioning rather than deteriorating fundamentals”
“AI compute basically to significantly outpace supply for years to come. There is no doubt about that”
“the penetration still is under 10%. So, this has so much room to grow”
“2026 we're at $800 billion a from the hyperscalers, you know, five of them”
How the episode opens
Morning. This is Dylan Jovine with Behind the Markets. Happy Friday.
Today is Friday, July 31st. TGIF and the last day of the month. Anyway, today I'd like to talk about basically is the AI trade in aggregate over?
Is the AI trade over? And the answer for me is clearly not. But as we talked about yesterday, we don't have a master narrative driving or carrying the torch.
A story. Wall Street hasn't settled on a story. And I'll tell you I have some notes here.
Look, no matter what, despite concerns, I mean you've seen in the past month that AI stocks have gotten hammered. Specifically the infrastructure plays that were receiving all this capital spending, they had gone bonkers. And they have gotten hammered in the past 30 days.
I am very grateful that before I went on my annual vacation, we closed a lot of those positions. But we still have a couple of positions there, right? Like Amkor, I think of Arm.
We still have we sold half of them for profits. And you know, we still recommend in the closed position portfolio, we still have those stocks. And you know, what do I think?
Everyone's saying is the AI trade over? Do you still like this stock? Do you still like that stock?
Look, in my view, I view this recent decline as a matter of positioning really really short-term investor positioning rather than deteriorating fundamentals on the whole thing. I also expect AI compute basically to significantly outpace supply for years to come. There is no doubt about that.
In my view, the big picture, the big build-out narrative is still firmly in place. Just look at the mag 7 earnings. I mean, this is happening.
And I expect AI capabilities will develop in a non-linear way.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai trade pullback
- ai compute capex
- mag7 earnings
- token maxing
- hyperscaler spending
Companies and tickers mentioned
- GOOGL
- GOOG
- OpenAI
- Anthropic
Watch the episode
Watch “Is the AI Trade Actually Over? Here's What the Selloff Really Means” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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