Being Late Is Just As Good As Being Wrong
Why the AI hardware crowd is getting punished, and where I'm looking instead
Those who finally gave in to the AI hardware trade after missing out for months are getting punished, just like those who picked up the bad habit of buying every 5% pullback.
Market psychology 101.
Those trades are now crowded. Everyone and their grandmother knows the current bottlenecks and the best proxies for return. The market is a place of probabilities, and you want to store your money in the assets with the highest potential. Those are rarely crowded places.
We are exactly where we were in September last year for neoclouds.
GPUs and compute were the obvious trade; we could never have enough, and the market priced them to perfection, until the trade got crowded, everyone understood the thesis, and latecomers got punished. Fast forward to today: only the greatest names bounced - Google and Nebius, while the lesser ones didn’t - CoreWeave and Oracle.
Being late on a right thesis is just as good as being wrong.
I'll use Nebius as an example to illustrate what I expect. Everyone here knows the company inside out, so I'll focus on market mechanisms.
The stock topped early October ‘25, shortly after the game-changer deal with Microsoft, in an atmosphere of stupid bullishness. Everyone talked about the name, everyone wanted to buy, and price targets were in the four digits. The trade was crowded.
Then the correction came, violent, down 50% in a month. It retested its W50 rapidly and went through months of consolidation, never losing that W50, before breaking out again.
This is what I expect for photonics.
Violent retests - where we are now. Weeks of consolidation. And breakouts later, for the best assets only - which are only a handful. Meanwhile, liquidity will rotate to the sectors we talked about, just like it went to energy/industrials at the end of 2025.
Chances are you’ll do fine if you hold great assets and accept the volatility — but you’d better have a strong stomach, and accept cutting those positions if they go south. The market won’t be forgiving on diamond hands holding the wrong bottlenecks.
Last week’s article went over this rotation and the pockets of strength on the market.
Catching the space retest, with Planet Labs up 20.7% and ASTS up 15% since.
Looking at Amazon with a 4.5% bounce.
SaaS names like Qualys, Zeta and Tenable up 20%, 9%, 27% respectively in a week.
Looking at healthcare, which performed well - especially Abivax, which received the confirmation expected the day after my article and shot up 50% in a week.
The breather is in AI hardware - including power hardware. It feels violent because the sector is overcrowded, so everyone talks about it. But other sectors are behaving really well, and we were positioned for it; the portfolio is down less than 1% this week despite a violent pullback in key sectors.
So the real question now is how to manage this retest.
Below, I break down exactly which names I’d buy, why I’m going as high up the supply chain as possible, and the one signal I need to see before I deploy the cash I’m still holding. I’ll also walk you through my book; what I’m accumulating and why, what’s on the chopping block, and the single name I’m about to size up.
