WHY AI STOCKS ARE FALLING!

The NASDAQ is down 222 points as of the recording of this video. We're going to talk about why AI stocks are falling. In fact, there's a key article that grabbed my attention. Uh, and it's a subnote of this video, but we're going to talk about it. This is the main chart, the main graphic we're going to be looking at. Uh, but look at this. The stock market rally now hinges more on AI than oil. If you truly understand how how big this is, it actually kind of blows your mind. Oil drives our entire worldwide economy. A lot of people don't want to admit that. They don't want to think about it, but it's oil and petroleum that pretty much goes into everything that we all need on any given day to live, to have the products that we want, all those kind of things. And it just is pervasive. And now that it's coming out that that we could see that AI is more uh important than oil from the stock market side, which is pretty profound. Okay. So, what we're going to jump into here, we're going to talk about is why the AI stocks are falling. Uh and is it a is this the beginning of something kind of bigger? Uh what is going on? Is it a rotation event or again is it started something bigger? And we're going to jump into every element of this graphic. Going to walk you through it. Uh ultimately my goal is to kind of alleviate any concerns or things that you might be thinking as okay this is this a bigger deal than it may be. I personally think it's it's a little bit of a rotation a little bit of a sell-off all kind of directly tied to kind of the Iran US conflict also uh and again a little bit rotation but it continues to be that pervasive fear that we see which is really the left side of this graphic. So what I'm going to do is I'm going to zoom in on this uh and we're going to kind of take a look at that. Let make sure you guys can see that everything. Okay. So on the left you see there why AI stocks are falling. Look number one AI spending may slow. This continues to be a a mantra a a storyline a narrative that just simply will not go away. And I think that it's because people don't really understand andor believe the numbers that are that are being bant you know bantered about about how big AI spending is going to be. I have said I have told you guys these numbers. The number right now for 26 is we'll end the year at about 750 billion in in AI infrastructure and AI spend buildout 1.5 trillion in 2027 5.5 trillion by 2030 and north of 7 and a half trillion by 2033. Those are true real capex dollars. And I think ultimately the narrative continues to come back to is the AI spending going to slow? uh you know investors worry that hyperscalers may not keep increasing AI spending. I would remind you that I think that it is an arms race between the hyperscalers Microsoft, Amazon, Google, Meta so forth. And I would also add into their large enterprise clients, okay? Which is ultimately why these hyperscalers are are spending so much money. And I will remind you of the two words arms race. I've said this in my videos. I think that that's probably the one of the best scenarios that you can think of. And whoever loses that arms race, i.e. doesn't spend enough money will be viewed as the loser in the kind of the one of the entire largest initiatives which is the AI buildout. And number two, AI infrastructure is becoming more expensive. Yes, it is. Ultimately, prices are rising. We're seeing it across the board, especially in in memory where we've seen prices go up 90 plus times if if not more. Micron, eshanx all have all kind of divulged their price increases as they've evolved. We know that we've got a major bottleneck in the memory space. Um, and that's going to continue to be there. It is it is HBM memory, high bandwidth memory that is one of the major major bottlenecks and those higher prices ultimately are driving more profitability to the companies like Micron, Samsung, SKHX and all that kind of stuff. So again, those rising costs are going to continue to be pervasive and who's going to end up being stuck paying for that? It is the hyperscalers. And again, which brings us back to number one up here in the upper leftand corner. It is that concern that AI spending may slow. Right now, we are not seeing any any indicators that AI spending is going to slow. I have said in previous videos, I think this is the main area that we need to look at from a knowledgebased standpoint and be aware that this is something that is out there. And if we do start to see glimmers of that where we start to hear from the Microsofts, the Amazons and so forth, the Googles, the Metas of the world that that AI spending is going to slow, then you're going to see some massive resets, some massive some massive valuations come down and it's going to impact every single sector of AI from Nvidia all the way down to to, you know, to the lowest levels of the AI stack. Um, I really don't believe in number three, valuations got ahead of fundamentals. Again, these are narratives. These are themes that are out there. Okay. And you have to kind of always temper this with what is being put out there and what am I seeing and is it real or is this just a news narrative that that the financial network needed to fill some time with and and they're kind of dragging out the oldie but the goodie uh you know stories. I'll remind you that on local newscast one of the things that you see on local newscast and I still see here in every day in Dallas for Worth is stories about fires at houses. Why? Because stories about fires get attention. What does that mean? stories about, oh, my AI spending may be slowing. Oh, this is kind of something that we may think about, you know, oh, valuations got ahead of fundamentals. Oh my gosh, you know, those are kind of the kind of think of those as stories about the houseires that you might see on your local news. It's kind of a very similar thing. And the networks, I'm talking about online networks with printed media, video media, and all the way to the to the, you know, to the networks that you see on TV, they all follow the same rotation of series, events, rotation of narratives, and they all kind of, you know, drag out the, you know, the latest things. Oh, memory is very cyclical. It's going to it's, you know, no, it isn't. It's changed. We've talked about that a lot and extensively here on the channel. Okay. So, what does this come down to as far as kind of AI stocks are falling? And again, AI stocks are falling across the board. We've seen it fall with uh, you know, AMD. Everything is pretty much down across the board today. Take a look at AMD right here. Uh, you know, AMD is down 2%. Okay. Uh, Micron's down. SK Hunx is down. Everything is down. The NASDAQ's down 260. Again, I think it's a confluence of events. I think you've got the the fear kind of flowing around the one, two, and three over here kind of AI spending may slow you and it it's always that underlying fear that I think that is being stoked by again the powers that be kind of the the media empire if you will. I think there's a couple of reasons. Number one, they want views. They want they want eyeballs. They want so they can sell you ads and you can see ads and all that kind of stuff. But again, I think there's also an underlying scenario. They like the volatility. They like to see that. They like for for prices to come down so that they can then invest more in all the and I've said the to you guys in a bunch of videos. Okay. In the middle, investors are taking profits after the after the one of the biggest AI rallies in history. Sure, you're always going to see profit taking, but again, I don't think it's pervasive. I think that everybody is looking at down the road, what are we going to see? And which brings me to an interesting scenario I want to talk to you about. Um, this is another article that I'm going to be doing in another video on. So talking about AI bottlenecks, okay, which were the massive trillion dollar uh uh opportunity. And it really identified three key areas and it was chips, memory, and networking. And so if you kind of look at this and you couple this with the discussion we're having in this video around the fact that how and what is this going to look at look like from a roll out of CPUs, memory, networking, all those kind of things. These are all the bottlenecks if you will, right? CPUs are going to become a massive bottleneck in the near future. And if you look at this like right here, so the CPU market is growing from 35 to 40 billion today to 200 plus billion by 2030. Uh AMD has estimates about 120 billion. They're probably a little bit a little bit low if that's what we're talking about. And this is this is talking about the rise of the new agentic AI area where we'll have these AI agents out there running everywhere. Okay? And that's the new wave coming. If you think about it, the current wave and what we've really been doing is we've really been building the models, right? And deploying the models in that in that capacity was a build model scenario. And the next wave is this agentic AI. And so if you take a look at just to give you some perspective and we'll bring this back to the selloff and we'll bring this back to the narratives on the left of AI stocks and why are they falling and is spending going to slow and all this kind of stuff. Okay. So if you take a look right now they're and this is kind of talking about okay um current cloudflare pegs US demand at 10 million CPUs to serve 100 million knowledge workers. This is in capacity to the agentic AI initiatives and 1 billion knowledge workers globally. Okay AMD, ARM and Intel have all flagged it and 25 is the first year of inflection. The stocks have moved but we think they they're going to go up. This is really giving you a very simple visual of ultimately how big because they they view that there'll be 100 million knowledge workers each of them is going to need one agent per worker which equals 10 plus agents per CPU which equals 10 million 10 billion excuse me is that right? Uh yeah yeah yeah y yeah y yeah y yeah y yeah y yeah y yeah y yeah y yeah y yeah y yeah uh CPUs and no 10 million CPUs just in the United States um globally you can see it's much bigger the point here is that we're talking about how the market is going to expand how it's going to get bigger with this wave of Aentic and a lot of times what you see in kind of current just right here right now when you're looking at it and you're seeing these articles and this kind of stuff people are not thinking about how big and and they're not think understanding truly the scale and that's comes back to if they really understood it, AI spending is not going to slow because it has to be continued to go on because again enterprise massive companies just outside of the hyperscalers, they are not going to stop spending money on AI because they have to to deliver that AI experience to their customers in one way or the other. Okay? and all of that kind of stuff that AI uh the AI agents will be pervasive inside the company and external as far as their ins internal facing uh work and their external facing the value and the benefit that those companies are delivering to their customers at irregardless of what market they're in everything from cars to insurance okay I mean to everything to grocery stores all that there's going to be in one way or the other the Agentic AI initiative is going to hit all every single uh you know every single sector. Okay. And there's one other one that I thought I loved right here and it was talking about a gentic era all memory is AI memory. Okay. And it talks about right here the HBM the high bandwidth memory in 26 is you know about a hundred billion dollar market in 26. But the total addressable market from 26 to 2030 is going to grow up dramatically scaling to a hundred billion now to 900 billion and to two trillion. And again, all memory is AI memory. And by the way, this is taking out of consideration or not even talking about the next major massive wave, which is robotics. And the fact that that the memory that's going to be needed, the memory chips inside of those robotics, uh, and I'm talking about human robotics, humanoid robotics in your house, everything every to to the, you know, to the robotics on assembly lines and things of this nature. It is again another massive massive sector. Okay. um and kind of talking again let's take a look at here what we got so memory is huge okay so kind of bring this back AI stocks are falling I think now because of fear and uncertainty I think because of a stoking of the fire of okay you know there's AI spending may slow infrastructure becoming too expensive so forth and so on it doesn't take anything away from the overall addressable market which are some of these graphics I just gave you here when we're looking at this okay so just continue to remember that and you need to big dig into those numbers before you let it kind of spook you and you let it change your your mindset associated. So what does this mean for companies like Micron and SKHX and S and you know AMD? Look, bullish factors are in place. We know that the capex dollars are there. They're going to continue to need to be spent. Is there short-term volatility in in owning Micron AMD, SKHX, Nvidia? Absolutely. Okay. These are high valuations. These are kind of tight rope earnings calls that we are seeing. any any type of a misstep as it far as far as future guidance andor current numbers andor an offhand comment about hey we might be shifting our manufacturing over here is viewed as just the a massive setting off of a wildfire event. We saw it with skhx about three or four plus weeks ago. We saw it with Samsung when they came out and announced earnings that were you know that were 19x. It was insane but the stock fell st fell down and it dragged the entire sector with it. Okay. So I think that this is a we've got a little bit of a rotation driven by kind of fear and uncertainty up here in the upper right. AI demand remains strong. I've given you some different numbers, some different uh charts analysis. Data data center construction continues. These you know these data centers I read the other this this morning that um Meta has got a $250 billion data center they're building uh here in the states. I think it's in Louisiana or something like that. Long-term invest AI investment does remain intact. It is not going away. companies are simply being repriced after huge gains. There could be some some validity to that. I do believe that. But what you're seeing is major opportunity uh you know to be able to buy some of these companies, right? To be able to buy um you know Micron in the low 900s compared to it was 1,200. And by the way, valuations are still the same. Price targets are still the same. For example, Micron price target is still average about 1500. We've got high ones all the way going all the way up to 2200. Okay, we're just in this little bit of volatility right now and that's kind of the the play that we're seeing. So kind of kind of similar to what it means for SKHIX, you know, the the the graphic kind of points out Micron and SKHX. Again, very much similar to a picture to Micron. We know that those are two very key players in this. And ultimately, it's all all different types of memory. It's HBM, it's DRAM, it's NAND. All those different types of memory are going to be needed. In fact, it is DRAM and NAND that are going to be needed even more as we move into the Agentic AI era. Okay. So, I think that what you're seeing is not an AI bubble bursting. It is a little bit of a correction. I think that's a correction driven by a little bit of fear and uncertainty in the market. Uh but again, ultimately I think some of that is being driven by what we're seeing playing out in, you know, in Iran ver versus US as far as their conflict. oil prices are rising, uncertainty in the macro of the market is what we're seeing playing out as well. And ultimately, it doesn't have it's not directly an AI stocks issue, if you will. And pretty much, yeah, every single AI stock across the board from trip from chips, memory, networking, all that, you know, capacitors, it it's all kind of being hit right now. And we got we do have a little bit of a repricing event playing out and I'm not overly concerned about it. So, what are your thoughts? I would love to hear from you. Links are in the description below if you want to go uh check out anything having to do with me or or learning more about me. My name is Austin. If you haven't already done so, please hit that subscribe, hit that like. I would greatly appreciate it. And again, I'll leave you kind of with this um stock uh why AI stocks are falling narrative here. So, you I'll zoom out a little bit so you can kind of take a look at that. I know that a lot of you guys love these graphics and you kind of like to screenshot them and and maybe keep them. Uh I appreciate that. I've had people actually reaching out to me wanting to get copies of them. Um, yeah. So, it's kind of cool how how I'm able to build these to give you guys kind of a really good graphical representation of kind of what we're seeing going on in any one given time. So, thanks for giving me a few minutes. I will see you and uh I don't think that that this what we're seeing today is something to be overly concerned about. And hopefully you can kind of go about your day and go, okay, I think I'm a little bit better now. I understand a little bit about more about it. All right, have a good one. Take care. Bye.