Chip and AI Stocks Are Crashing. Here's What I'm Doing RIGHT NOW!

the AI and semiconductor market continue to take a hit. On today's episode, I want to share my overall thoughts. I got some good news, I got some bad news, and then I got some really, really bad news. So, let's take a closer look in today's episode. But before we begin, if you're serious about semiconductor and AI investing, I break down major earnings and conferences inside my community, institutional quality research built for retail investors. Get 33% off at whatthechip.com. All right, guys. Welcome back to another episode. Like I mentioned, we have some bad news, we have some good news, and we have some really, really bad news now. Actually, and we got some really good news as well. So, let's stay to it. So, bad news, semiconductor market, AI market continues to be on a downtrend, right? We have companies like momentum down 8.4% on the day. In the past 5 days, the stock is down roughly 20%. In the past month, stock is down roughly 23%. Now, year to date, the stock is doing amazing, right? So, I do believe if Bayers are kind of coming out and and doing their exciting run during this bare market, um most investors, especially investors that just owned the stock for a little bit over 7 months, are still doing extremely extremely well. We had Micron down roughly 8% sitting at $820. We have Core sitting at $67. Now, I have gotten a few comments asking, Jose, are you still very much bullish on Core? Yes, 100%. market cap of $36.7 billion and one of the biggest NeoCloud players out there with over 1 gawatt of active power. This is one I'm continuing to buy over time. We have AMD down 8%. Marll down 7% sitting at 174. Cam Techch equipment players down roughly 7.5%. You have everything right from semiconductor AI chips from optics from networking um from equipment players from memory plays all down a nice amount. And there's a lot of different bearish cases um kind of just going all around the market. So in today's episode, I want to kind of share what are my overall thoughts and why I believe this overall market is selloff is kind of stupid, right? In my opinion, and why I am buying. So bad news first, semiconductor selloff, right? Good news, I actually got my glasses back. I don't know if you guys Well, not my glasses back. I don't know if you guys have been following the Jose lore over the weekend. I was in Florida. I lost my glasses swimming in the ocean. Yes, I should not be wearing my glasses. My wife told me a thousand times after I lost it, but I have backup player pair. So, right now I'm rocking some backup glasses. Really bad news. Now, I can actually see. So, when I opened up my portfolio, it was a crazy crazy time. I wish I didn't have my glasses. But now back to the good news is I believe the sell-off is pretty dumb especially with some of the data uh that I've been collecting and reading through the past few weeks of earnings. Right? We've had earnings um important earnings at that right we had Alphabet, we had TSMC, we had ASML, we had an AMD event, we had Intel report earnings and I think all of them have told me that this AI cycle continues. So right now what am I doing with the stocks? I'm actually buying stocks right now and I don't have too much dry powder left. So now is the time when I tend to sell some lower beta names and go with some higher beta names. Right? If I have ETF like let's say for example a semiconductor ETF, semiconductor ETFs are down what 15 18% from their overall high while some of the semiconductor stocks are down 50%. And I do believe some of these stocks are going to return back to those levels. Not all of them, but some of them are going to return to those levels and beyond that. So, for me, I don't mind selling these lower beta names and and lower beta names compared to the higher beta names, selling my semiconductor ETF, selling some other ETFs that I might have. I might have a Max 7 ETF. And right now, that is what I'm doing. I'm selling a lot of them and going into high beta names like Cororeweave, like I I I bought a lot of different stocks today, right? I bought um Air Test System today. I bought what else did I buy? I bought some OIC plays. Um I bought I a whole different amount of companies that I bought in today's opportunity. Um and again, I haven't used all my low beta names. I still have a lot. But if this downtrend continues, that's what I like to do. I like to little by little sell off some of my lower beta names to enter into high beta names when there is crazy crazy uh sell-off happening in the industry. Uh but and also if you want to hear my overall thoughts and see some of the things that I am doing um check out what the chipappen.com right I do deep dives on earnings we have deep dives on some of the biggest earnings we also have deep dives on conferences we have exclusive live streams today's live stream we were just kind of talking about the overall market our own thoughts we had a lot we have a lot of great community members so check out whatthechipappen.com especially especially with earnings coming out right now a lot of great information. Now, let me explain why I'm not worried, right? I have complete diamond hands in this semiconductor and AI cycle. And it's because a lot of data points and personal usage, right? AI I I use on a daily basis. And AI has completely transformed the way I do anything in forms of research and in forms of coding and and goes on from there. And I can see that this is just the early innings of AI. AI has multiple growth opportunities in other industries, healthcare, cyber security, robotics, even more implications in coding. In coding alone, you can have many more different apps, the creative apps, video generation, um you can have it in um game creation and and there's so many different applications that have yet been that have yet to be touched by AI. And I believe the opportunities are going to continue to begin in this space. But don't just listen to me, right? Listen to the CFO of Alphabet mentions that their cloud revenue were up 84% primarily driven by Google Cloud, which grew faster than cloud overall. Google Cloud's backlog increased by more than $50 billion sequentially, reaching 514 billion in the second quarter. The increase was driven by strong demand for our enterprise AI software uh offerings. Because of that, because of that, right, um Google went on to increase their capex, right? Their capex is now over on the top end over $200 billion. That is demand from a company that is seeing the backlog built up and they feel confident of spending all that money in AI. TSM. TSM the manufacturer of chips. And if you have watched my videos individually, I've done these individually. This information might be old news, but I'm putting it all together because I do believe altogether paint a picture. Google was the cloud provider. TSM the manufacturer. Given the continued strong structural demand from their customers, including the new emerging agentic AI market, new right this newly, this is insane. Many people think that we are done with the agentic AI era. It's just beginning, right? It's just beginning. They have decided to raise their fullear 2026 capital budget to be between 60 billion and 64 billion as we continue to invest heavily to support our customers. TSM also um oh sorry, and this goes back to Alphabet, right? Alphabet increased their their overall capex like I mentioned 195 and they expect capex in 2027 to continue to grow. There is no slowdown from Alphabet which is the cloud provider. There's no slowdown happening from TSMC which is a manufacturer player. TSMC during the same earnings call believes that they are comfortable that this market is going to be healthy till 2029 potentially even 2030 based on the visibility. Now between then there could be small dips and um dips in between but the long-term trend is still very much bullish and TSMC doesn't say things like that too often. Intel, right? And and for those that are not familiar, it's not just about the company itself, but who says it? Lee Bhutan, right? The current CEO of Intel has been one that was very conservative with Intel. One that didn't want to spend money just to spend money when he was part of the board and he kind of did a lot of cut budgeting um budget cuts when he started, but things are changing now. He mentions they are also strengthening their outlook with the additional strategic customer wins and long-term agreements in quarter 2. Our top priority is to ramp capacity and improve factory output as quickly as possible to support customer demand even as we work to improve our competitive roadmap. So Lee Bhutan a player a CEO that was very conservative has completely shifted gears and it wants to spend more money. We did hear that they increased their capex during their overall earnings. ASML, right? So, we have who? We had Google, which was a cloud provider. We had TSMC, which is a chip manufacturer. Uh, we had Intel, who is a a chip designer and also a chip manufacturer. Uh, they talked a lot about kind of the CPU shortage as well, and kind of the AI accelerator demand. Now we have ASML an equipment player mentioning that customers in both segment memory and logic are entering in long-term agreements with their customers providing them with longerterm visibility and the confidence to add significant capacity to support demand. In logic there is a continued investment not only to enable the expansion of three nanometers in support of the latest generations of AI accelerators but also both at 5 nanometer and 4 nanometer. So big companies are not only expanding the current generation, not only are they continuing to ramp for future generations of 2 nanometers and bo, but they're also accelerating prior notes and that is something most manufacturer players don't do. So ASML right is giving us kind of this feedback that they continue to see this demand across the whole landscape. ASML mentions that for 2027 they are now close to being fully covered with orders of low NA EUV machines and for 2028 they have already received a significant amount of numbers of low NA EUV orders. So this is a company again that's continued to showcase what's different in this cycle. AMD, Lisa Sue, and this is what's important about this, right? Many pe you can't just buy GPUs and and and all these chips and not have a long-term plan. In prior cycles, you didn't really have to invest in so many different things. But today, right today, when you're planning GPUs and AI servers, you have to be so much more involved than it was in the past, right? You have to make sure the power is there, the data center, the location, all the regulations are okay. So, you have to be on top of everything within the cycle and that in my opinion adds a lot more weight to this demand. Um, because they need to have the visibility and Lisa Sue mentions that they have visibility 12 to 18 months on their Helios rack which is extremely bullish for the AI chip market. Now again, that doesn't mean AMD is going to win or that these individual players are the best picks about them, but when you start to put all these data points together, it tells you a big story of the AI market. If everybody's kind of seeing this space, continue to see massive demand, if we're still very early in Agentic AI, I believe a lot of these sell-offs are an opportunity for my portfolio. Now, this is why I posted this today. So, I thought this was hilarious. Yes, I am a very funny guy. Let me know in the comments if any of my videos have ever made you laugh. And if I didn't, don't let me know. Don't let me know. Just don't say anything. Um, but investors buying high beta names today are no questions about it. I'm ready to be hurt again. All right. I'm buying. I I I bought Cororeweave. I bought Iran. Like I mentioned, some of the other names as well. I am very excited with the draw down right now. The other thing is um Chris actually posted this and and and Chris is uh I believe I could be wrong. I'm assuming here and we all know what happens when when you assume I I assume Chris right now is not the most bullish on AI models and supposedly he he mentions I see a lot of people post this picture but no one is asking why the number is showing a hockey stick growth. Why did the growth rate plateau so suddenly, right? We see again can this is anthropics um annual reoccurring and you have this strong growth and then out of nowhere there becomes this hockey sticks down right it plateaus and this is the great thing for me about charts right charts are always are just an image and with any form of data you can always see the bullish case and you can always see the bearish case right I'm pretty sure many bears if they're watching this video everything that I showcase as a bullish case every bear saying look this is an over capacity issue waiting for happening happening and all the boosters are saying wait this is such an undercapacity uh we are under supplying the market so much that we still have so much room for demand right any data point can be seen in both directions so why did that growth rate plateau so suddenly could it be compute constraint could it be open AI winning back market share could other models like Chinese models be getting market token budgeting be actually a thing or companies slowing down because they got ahead of AI spending and return on investment. I gave you two bullish cases here and three kind of bearish cases I would guess or or whatever, however you see it. But to me, right, as someone who's been following the space, I believe that if there is a hockey stick, it most likely has to do with compute constraint. An entropic doesn't have enough compute to solve to serve everybody that it can, right? And and again, that's me as a bull, but anybody as a bear can obviously see something else. all uh revenue um annual recurring revenue is slowing down. The AI models, the Chinese AI models, the token budgeting. Now, there is also one more thing um that I I do believe Chris posted that I thought was really good that people um need to understand and thropics annual reoccurring is a mirage that's luring people into the lion's jaw. People need to understand how ARR works and they take the last month's revenue, multiply it by 12 and say this is how much our annual reoccurring revenue is. But that's not necessarily always true because what happens if a company spent a lot of money this month and then next month they do token budgeting your ARR was completely completely off given by a high token max. So it is important to understand and this is why for me I don't always look at the numbers of things but it's more just the trend indication and then the innovations of AI. So I I I definitely would recommend if you don't f you haven't read it uh to follow that but to me the AI market is still very early and I wouldn't mind and I don't mind I'm I'm ready to be heard again right I'm ready to be heard again. Uh we also had Seagate and Bloom Energy report earnings today. Seagate mentioned our performance is being driven by robust cloud data center demand and disciplined execution and we see the momentum continuing in 2027. I think this AI story is going to go beyond 2027. Bloom energy right they they mentioned that they continue to see strong solution. Today all the major US hyperscalers and over a dozen US neoclouds AI labs and collocation data center operators have validated and approved our power solutions for the AI factories. Bloom is now a standard for AI on sites and power. I think as we continue to see these bullish news in all different aspects. It's not just one player, right? I'm not just looking at one industry, but I'm looking at multiple places within the industry. Is anybody saying anything different? And at the moment, the case is no. We also do have some earnings this week that we are going to pay a lot of attention to. Right? Meta reports earnings tomorrow. I I I think we're going to get some crazy capex number with Meta. We're also going to see some strong improvements in advertisement and average revenue per user. Uh we have Microsoft that's going to be reporting. I'm excited to see their backlog. I'm excited to hear about their capex. I'm excited to hear about their cloud growth. And I think they're all going to say very similar that this AI cycle is still very much in early innings. And then next the Thursday we have Amazon and I forget who else reporting earnings. But this week, even if the stock price don't really move in the semiconductor stocks or or my portfolio goes up, I am here just collecting bullish data points. Oh, what does this company say? Meta say that. All right, let me put this into my bullish suitcase. So, right now, yes, I am buying and any dips, I'm going to continue to sell off any low beta names and buy more. Right. Some people might say, Jose, how can you continue to buy? Well, I've mentioned in previous episodes, I don't always go all in at I don't I don't go all in at once, right? It's trends and trends that I do over time. Right now, the portfolio has given me the opportunity. I don't have any more dry powdered, but I do have a lot of low beta stocks that now end up becoming my kind of cash position and I end up entering into high beta names. Now, if you are curious and you want kind of more thoughts about the semiconductor industry, check out what the chipappen.com. Right now it is 33% off if you use the link down below. Um if not um right right now is a great time to enter uh into the community. We have a lot of great members. See you all. Take care and have a good day. Peace out.