Market Rebound & My Top AI Infrastructure Watchlist
It’s great to see the stocks we picked up on Thursday and Friday rebound anywhere from 15% to 40% (e.g., LITE, SKHY, CIFR etc). As always, be sure to check the live updates channel to stay up to date on all transactions.
Below are a few quick thoughts on how I’m positioning ahead of the next few days, starting with a brief recap of my weekend notes.
Weekend commentary from Preview of the Week Ahead post
“In recent weeks, especially since July 1st, we have seen signs of a market rotation, with mega-caps, software, healthcare, and consumer names catching a bid. Last week was a mixed bag: energy, consumer defensives, and healthcare generally performed well, whereas technology—particularly semiconductors and AI-related names—continued to take a sharp hit.
While the unwind in momentum has been sharp, the preceding run-up was historic and, in my opinion, went too far, too fast.
Regarding the semiconductor and AI complex, I believe several names are becoming much more attractive. The issue is that they remain expensive on trailing metrics while looking reasonable on forward estimates—precisely what bears will point to when arguing the outlook is overly optimistic. Consequently, these equities currently sit in a middle ground: too expensive for value investors, yet lacking the momentum that trend followers require. Given that many are in near-term downtrends with broken technical structures, a period of consolidation until positive sentiment and catalysts return seems the most likely outcome.
Overall, I think it is time to start prudently looking for investment opportunities if you believe in the long-term AI buildout thesis. However, given the technical damage and major mega-cap earnings coming at the end of the month, patience remains key.”
Current Market Context & Earnings Ahead
This sharp rebound came a bit sooner than I anticipated, especially with GOOGL reporting earnings on Wednesday, the 22nd. I initially wondered if market participants would hold off until after results, but the bounce has certainly been welcome.
The market appears to be reaffirming that we are still severely short on compute capacity, supported by recent announcements from both Moonshot and Databricks (refer to recent posts by Moonshot and WallStengine on X below)
I expect GOOGL earnings to be a major market catalyst.
The Key Metric: Everyone will be hyper-focused on Capex, specifically total spend, quarter-over-quarter growth, and forward guidance.
Potential Scenarios:
If Capex guidance is raised, expect the broader AI trade to react favourably.
Conversely, because we’ve front-run earnings with strong upside moves across memory, semiconductors, and AI infrastructure, there is a risk of a sell-the-news event if expectations aren’t fully met.
Current Strategy & Watchlist
