AI Stocks Are Crashing. Here’s What I’m Actually Doing

Hey everyone and welcome back to another video for today. And for those that know us already, welcome back to our little therapy session for this current market. So in today's video, let's talk about what the heck's going on in today's market. Most AI stocks, growth stocks, tech stocks are down. That means, of course, as you well know, that suddenly the companies that you owned yesterday and still own today suddenly turned into bad businesses. They're not going to grow anymore. You probably made a mistake and you should probably only buy the names that are green today. I hope I don't have to explain why I'm being sarcastic right now. Right? We've seen this time and time again and I've said this for months now. This is a headline driven market. the narrative if the narrative is suddenly bad because we have a delayed IPO because and it's always the same two names because OpenAI and Entropic it's always these two AI labs that have issues. How come we don't hear about continuous issues security issues leaks you name it and all the other companies all the other AI labs out there they seem to know how to figure things out. Yet it's always entropic and open AI that have issues that are in the headlines really. But if we go back to what's happening right now today or actually it's been happening for a couple of days just like today really the market took took a downturn, right? We've seen here many many names down quite a lot. If you're probably looking at your portfolio right now and you've had a very good year because that's the thing. If you've been having a very good year, probably means that today you're down bad, but that also means that you're still up significantly year to date. So, we have here a lot of red. We'll talk about that. We'll talk about the core situation. We'll talk about ASML's earnings towards the end of the video. And then I do want to share my thoughts on Paul Tudtor Jones came out yet again and shared his opinion on how the market is going to be horrible in 2027. Okay, my guy. In 2025, it was like 1999. A year later, in 2026, it is like 1999. I guess I guess maybe one day you'll be correct. It might be like 1999. We'll see. But first up, we need to talk about Core Weave. Well, actually, it started with Oracle. This is core. Which one is this one? The 2032. Okay, this is the 9.62% one bonds for coreweave. They're now at 14.3%. What the heck does this all mean? Well, the price of it goes down, the yield goes up, price goes down because there is continued selling. Yield goes up. What does this mean? This means the market does not trust Core as of right now. They do not trust Coreweave to deliver the goods on time to pay the interest payments on time because interest payments I think last quarter were $640 million or so which has more than doubled and I believe this quarter we're already looking at something closer to $900 $950 million. Now if of course there are many delays with core even I believe there are some others for core weave as well. We took the 2031. Same thing here. It's 15.7% right now. You can see a big jump. But it has been rising steadily since August. But here the fears are well the same as before. Backlog is huge. We know. Cool. But you're not expected to make any money as of right now. You have a huge amount of debt. Can you make the interest payments? Right? Because interest payments cannot be delayed. But their clients, their clients, right? If if some of them cannot pay core or if some of them cannot deliver a data center on time, something like that. Well, that can be delayed, but that does have a material impact on Corey's business on Core being able to generate billions of dollars in revenue and then being able to pay the interest, pay down their debt. That's the risk. This is something that we've known about, right? This is not like people coming out right now and say, "Oh, this is this is incredible." No, this is not new. I'm going to pull up here maybe Oracle, although Oracle does have quite a lot here. But even this one here with Oracle, this thing has been going up and up and up. This was for 2.87% 2031. We are already now at 7.1%. But this isn't new. This this also doesn't tell me that this is a bad business. Cloud, AWS, Azure, Google Cloud, right? These are not bad businesses. They're not apples to apples the same. Plus, the other businesses are very profitable ones. So, okay, the investments here, it's backed by a very good core business. But as we know, not every NeoCloud player is going to survive. Execution here is very important. We've actually have the CEO of Core We've come out here and say a couple of things. This is Cactus Jack has a WhatsApp channel as well. Breaking news for all your financial needs. I'm not sponsored or anything. Just a great great way for retail investors to get news as soon as possible in a free way as well. So, Corewave Co speaks in email to companies seen by Bloomberg. Corwe says rivals weakness is bleeding into the narrative. He said with regards to the other IPOs, they don't have what we built. The IPO delays are bleeding into Cororeweave's narrative. The backlog more than supports that obligations. We are confident in funding, sales, and backlog. And he says that he's confident in the business model. Of course, he's not going to say uh the exact opposite, but it's again, it's up to them to deliver each and every quarter. This isn't something new. We've heard from them as well that from every single quarter from here on out margin-wise, it should start to improve. And if they can show this to the market time and time again, if they can show that they're recognizing that backlog on time or maybe sometimes faster, and if they can show that yes, because prices per megawatt has gone up, our business is actually a bit more profitable than previously feared. Great. Then the narrative shifts here and we are in in the short run we are yes headline driven and narrative driven market because we are in such a growth cycle right now that we've seen time and time again it's should first ask questions later and there are many questions many questions some of them have been answered but the big ones not yet we're still waiting for entropic and openai to go public so we can actually see what's going on in those businesses with regards to the return on investment for a whole investment of this AI super cycle. Of course, we will have to wait to see what happens by 2030 and onwards if the investments make sense, but as of right now, every single company here is producing the goods. Yes, some small delays here and there have happened. But the beauty of the earning season is that we get to look at the actual results and we get to listen to the guidance and to what management is telling us that's going to happen next quarter and maybe already next fiscal year. But as of right now across the board, doesn't matter where you are in the supply chain, everyone's saying the same thing. We are sold out. Demand outstrips supply by an order of magnitude. We see orders all the way to 2030, 2031. Some companies are sold out all the way to 2028, 2029. So clearly the growth will still happen. That's that's a known thing. But then comes the other part which is again something that as an investor you know or you needed to know. Certain companies will just execute much better than the others. And yes, in such a growth cycle, you will have a lot of companies that will raise capital in order to meet that demand, meet that demand maybe faster and grow much faster. Yes, dilution happens. Yes, you take on debt. But if again if the return on your own investment, the return on invested capital is much higher than the cost of capital, it makes sense. But in the short run, yes, in the short run, we are going to have these types of shocks because you throw something at the screen, these companies will report their earnings when they report. They will not come out on a random Wednesday and say, "Oh, these headlines are not true. We are actually generating XYZ revenue, earnings, this is the margin." No, that that's why we have an earnings season. Is this an opportunity? I think this is an opportunity if you wanted to buy extra shares of something over the past couple of weeks. Everything was going up. I think it's an opportunity. But then again, if you don't like what you're seeing here because there are too many questions, not enough answers, plus we are going to go into earning season and you want to wait, it's also completely fine. Now, what also added to what's happening today is this CPI report came in a little bit hotter than expected. But guess what? Guess what? The majority of the bad, let's say, inflation comes from, yes, you've guessed it. Fuel, oil, and gasoline. Who would have guessed it, right? Who knew that when oil prices are high, this is what's going to happen, right? All the rest all the rest here came in a tiny bit a tiny bit hotter than expected but all still well in range. Now do you know what will happen next month when we get the October CPI report and crude stays under $100 for over a month. Guess what? We'll have less of an impact on the CPI report. So again, right now we know inflation is sticky. High gas prices, oil prices are high. That has an effect on all of these reports. But if you look at the core numbers here, it is not that bad. It is not great, but it is not that bad once you figure out the oil price issue, which in my opinion, we're going to see a small escalation in the Middle East region pretty soon. just my guess, but afterwards it will get figured out. Now, to add even more to this red day, of course, we can listen to what legendary investor Paul Tudtor Jones had to say about 2027. Now, legendary investor Tudtor Jones, Paul Tudtor Jones, sorry. Well, according to the internet, over the past year, over the past year, he hasn't done much. His returns are close to zero. Whereas the market has gone up over 200%. Yes, legendary indeed. I was thinking back to a conversation that we had about a year ago around the same time >> and I had said something to the effect to you of where do you think we are in the market cycle >> and you said something to the effect of >> maybe it's like 1999 but remember that the market still went up another 40% after 1999. So here we are a year later where do you think we really are? Boy, it it it still feels like 1999, a twospeed market. You've got it completely perfectly bifurcated in the sense that you have obviously everything that's adopting AI and everything that's not and they're going in opposite directions. And that was pretty much the case in 1999. >> So a year ago, we were in 1999, but stock market can still go up. Stock market went up. A year later we are also in 1999. Okay. Interesting. Again, in 1999, most of it was not funded by trillion dollar companies generating hundreds of billions of dollars in free cash flow. No, the internet companies or the cloud companies or the AI companies of today barely existed back then were barely a real business were barely generating revenue especially not profit. So to continue with this comparison to me just doesn't make any sense. uh if I if I was thinking for a year from now 2027 is going to be really really challenging for the stock market and I say that >> because >> because if I just look at the flows and that's probably what we look at the most uh what I look at the most you probably got the most negative flow picture for the US stock market that we've had say since 2002 and By that I mean if we sum up all the buybacks M&A all the positive things that has powered this market so much for the past say since 2009 if I sum up all those >> right >> and then I subtract from that the IPOs secondaries unlocks etc then you've got the certainly the most negative flow picture since 2009 um so that underlying corporate support that was there year in year out is now really shifted. When you think about the $2 trillion SpaceX, becoming anthropic and open AI, it shifts the math and and and makes it more difficult for the market. >> By the way, are you in the math of the valuations of some of these big AI companies? There was obviously a bit of a freakout last week as it related to OpenAI's valuation, >> right? Um, we have Anthropic coming up likely in November. >> So, we'll skip the Antropic IPO talk because yes, I also agree that $2 trillion for these businesses is absolutely ridiculous. $2 trillion for SpaceX, completely ridiculous. But yes, if suddenly we are adding three $2 trillion companies in the market sucks the money away from other sectors. Although some will say there's enough money on the sidelines, but that's not the point. at the fact they say oh 2027 is going to be really very challenging well apparently the last 10 years have been very challenging for uh Mr. tutor drone as well. But 2027 is the year where we are expected to see quite a lot of acceleration in growth for many of the companies that yes are maybe expensive today look at very expensive today look quite small. The the mismatch doesn't make any sense. The neoclouds but in 2027 they're suddenly expected to generate billions and billions of dollars more. Not only that, I am expecting towards the end of 2027 to see actually free cash flow profiles improve. So 2027 being challenging. Yes, it might be challenging for certain companies that cannot deliver the goods might be challenging from a perspective right if we look at oh capex growth is slowing down. We know that certain names are going to be impacted but capex growth slowing down does not mean that capex does not grow right that also does not mean that the companies that have been sold out for 27 maybe 28 close to 29 that that suddenly changes. No, but the narrative the narrative might change as of right now. What could break this market? Well, what could break this market? It's a question for you because as of right now, as of right now, time and time again, companies come out, good results, good commentary. There is just momentum across the board. From time to time, we see stocks take a dip. Okay, take a dip. Take a breather. Take a dip doesn't exist. But then again, if we are looking for reasons for the market to crash, one main reason, of course, the big companies funding this all say enough is enough. As of right now, I see no reason for them to say that, but if you're looking for reasons, that might be it. Second of all, inflation continues to go up. Energy prices continue to go up. That's possible, right? Can we go into a recession? recession, GDP growth, negative GDP growth for two consecutive quarters. It's a long, long way to go, but hey, let's put it let's put it on the table as well. More rate increases. Let's put that on the table as well, cuz right now we're already baking in a couple of increases, but maybe there will be more. So, all of these reasons could be why the market might crash or why 2027 could be a challenging year. But then again, 2025 up until that second week of April was also a challenging year. That's four months. And yet, yeah, 2025 was a pretty good year for growth investors. So, it's all about how you look at things. You want to trade for a week? Do you want to invest for many years? Are you scared about headlines? Hopefully, by now you've learned how to manage uh these markets. Now if we have a look at ASML, AML reported earlier today good results across the board even good comments. Stock is down almost 2%. Of course as we know ASML is also not one of these names that is cheap trading P 43 forward one 30.4 definitely not a cheap name but the results the results were good across the board. Total net sales, system sales, install base, management sales, all good. Gross margin came in even better than expected even for the full year. Better than expected. If we look here at the split between technology, EUV and all the rest, 49 EUV, 39 the rest end use, 54 logic, 46 memory. So yes, a bit of a shift from Q2 for both of them actually. Then for the region, we actually had a big a big push for the quarter in China. So 23% China last quarter 14 last quarter we had 43% South Korea this one 31 US 13% last quarter US was 9% this is basically the split by end use install base 8 that's true Q3 so year to date 8.5 billion for install base management 11 billion logic 10.3 billion in memory as for well we'll skip that for now outlook Look Q4 between 14.2 to 15.2 billion e of net sales gross margin around 57% which now means that gross margin for the fiscal year is going to be 56%. But as we know at the beginning of the year they guided for between 51 to 53%. So what improved? They said volume helps. Clearly we have increased our expectations in terms of total sales and higher volume obviously leads to better fixed cost average. Mix is also important if you look at EUV and immersion as key drivers for the gross margin. Both of them look pretty strong and also obviously as they mentioned before the install base business and the upgrade business included in there that is very very strong driver of the gross margin. Then moving on here, valuebased pricing and contribution that might play on the gross margin. How is that showing up as part of the outlook? They said that the effect of that is not really visible in 2026. It will start to become visible partly in the course of 27. The full impact of that will start to see in 28 and beyond. As for further visibility here, basically for our holistic product portfolio and on the long-term increase visibility for our demand, especially with EUV, there are a lot of discussions with our customers that are now shifting beyond 2027. A lot of order intake for 2028, but also some strong interest to already place orders for 29 and sometimes even 2030. All of that is great, but going back to what I said at the start of this video again, there's just too much demand. So even with the DUV part of the business which is immersion at this time last year we were planning to ship quite a few less tools we move back to a very strong year and we are planning to ship about the same number of tools as last year. So it's clear that we've done some good work to be able to start the RAM very aggressively. Last quarter we talked about 30% more capacity next year and also the aspiration to have another 30% increase in 2028. But to be honest, it's becoming very clear that 30% in 27, 30% in 28 will not allow us to meet our customer demands. But okay, stocks are down, so that might be wrong, right? No, the demand does not disappear because the stock is down. And so, my fellow investors, it's not a great day in the stock market, right? But as I said before, if you've been having a very good year, because if I put here the year-to- date performance, everything's still very much green for most of the names here. So, if you've been having a very good year, yes, you're probably a red today and down today. Does this mean that you have to buy every single dip? No. Some people don't have cash, but okay. If you're happy with your exposure and you don't think that the business is broken, just don't open your portfolio, close your PC and and go outside, have fun. If you have cash and you're interested in to add more average up or in some cases maybe average down, good businesses, yes, are available at a cheaper price today than they were yesterday. bad businesses are still bad businesses today that are trading yes for cheaper than yesterday but still a bad business so to me very simple I actually I'm looking to buy more Axon looking to buy more Nebus yes Axon has nothing to do with this but Nebuse does Nebus is down 10% or so and as I said in the last video and past videos as well if we do dip back under $200 yes I will be adding a little a bit more. Could I increase my broad composition a bit more as well? Probably. Probably that will happen over the next couple of days. So, all in all, that's about it for me in today's video. As you know, therapy sessions always good to have, but hopefully we don't have to make these types of videos too often, right? Cuz it's nice to get things on a discount. It's also nice to see things go up time and time again. Although I do think that we were quite spoiled or still are quite spoiled since the end of 2022. So, can't really complain that much. Then again, complaining is free. Anyways, that's what I've got for you in today's video. See you all in the next one. Bye-bye.