The Tectonic AI Shift Is Here

Micron (MU) delivered blockbuster earnings and guidance, yet its stock declined sharply post-report due to unsustainable 86% gross margins and AI-driven memory price inflation. AI hardware stocks have experienced parabolic gains but are now seeing significant profit-taking and rotation as market participants may anticipate normalization in memory demand and margin compression. Massive AI infrastructure buildouts may be peaking, with hyperscalers and memory providers facing risks from overcapacity, unsustainable obligations, and intensifying global competition, notably from China. High-quality software stocks like CRM, NOW, INTU, NICE, and others appear undervalued after severe bear markets, offering attractive entry points as capital rotates out of overbought hardware names.

The AI bull run, which began around late 2022/early 2023, has been spectacular for many market participants. First, it was the picks and shovels, like Nvidia ( NVDA ), Broadcom ( AVGO ), and others that led the way. Then, we witnessed the