Semiconductors Predictions

[0:00] I would be a seller of this move. It's a dead cat bounce. And that's why you see these waterfalls like you saw in 2000, like you saw in 2022 where retail keeps buying the dip based on recency bias. And these these waterfalls tend to persist for more than just a few weeks.

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[13:46] I think you're going to see into, you know, maybe the third, four week uh third, fourth week, week of August, uh this deadcat bounce. But retail investors are now chasing this short covering move off the lows 20 30% on stocks that had fallen, you know, in the month of July alone, 30 to some in some cases 55 60%.

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[38:25] these really big name semiconductors. I mean, I I I think people that don't use this as a time to sell those are going to pay the price. And that's a group that's feast or famine. I've been around them for 40 years and they've all the way back to Texas Instruments and they it's feast or famine. I mean, you're going to blow them up, but they're going to come right back, give it all back one of these days.

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[19:32] there's a decent probability we're going to see SMH roll over again and take out the recent low at 503.

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[8:51] I I think you're going to look for support at the 200 day moving average. Many names bounced off the 200 day moving average here more recently. Um you know that's where it should find support.

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[39:25] I mentioned the semiconductor index before it it went parabolic that's never a good sign whether the silver price goes parabolic or the semiconductors or bitcoin at some point yeah it it comes comes down hard and um and that seems to happening now with the semiconductors many of the old school tech uh stocks are already down heavily over the last few months um I'm a bit cautious here

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[23:37] I do think I think the tops are in in a lot of markets, including the semiconductors, because I do think margins are going to compress. There's no doubt about it.

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[24:08] you're going to get a snapback that's probably epic in these stocks. I mean, I could see Sandis going back to 13-,500, 50% upside potentially off the lows. But at the same time, you got to just be realistic that these are cyclical... I do think again bounces are to be sold into uh in the semis.

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[11:50] This is literally a replay of the tech bubble except not to the same degree. It hasn't gone down 70%. But it's on the way there.

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[13:02] I don't think this correction is over. I don't think that we're going to new all-time highs on the semiconductors. I am relatively confident, high probability that the top is in for the cycle of these.

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[8:41] whenever this semiconductor cycle peaks uh and starts to go down, it's probably going to be pretty severe and it's going to take a while to play out before they really become a a place you want to actively look in again.

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[15:47] I'm a I'm a little worried um about them. And then the last one is just what I would call that the software companies. And I think they don't have a moat is I guess my point. Most of their profits, Adam, uh to your to your point, actually just come because they jacked up prices. They're not even increased volumes that much.

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[23:17] Yeah that's going to unwind later this year. Is that your thesis? I I I think I think absolutely.

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[15:18] So, you could see some correction in the the you know, month, a few weeks to a month.

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[11:02] I I suspect that we'll be shocked at how quickly this cycle rolls over and how much this ends up being a little bit of a mirage in terms of the demand for these things.

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[8:03] until memory ceases to be a bottleneck, you know, that's an area I'm going to want to be in... I do think memory is an area you want to be in.

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[24:17] I've got a big put in arc. I've got a big put in SMH semiconductors and then we're longing a bunch of the bottleneck names.

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[0:18] I think your big risk is in semiconductors. Those stocks have gotten way ahead of themselves right now. There's a lot of concentration in that sector. I would be careful with that sector. I would take profits. I would hedge um and then kind of let this market kind of work its way through.

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[19:40] what's going to happen to semiconductors in the notsodistant future is going to be a very major reversion back to its mean.

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[27:29] everyone right now is in the chips, right? The microns and the semis, which is a commodity which is going to absolutely crash and burn.

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[15:16] it's going to be problematic uh you know over the next year 2 3 years significantly problematic for a lot of these companies at the the center of the the AI bubble.

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[3:50] semiconductor stocks are up 80% in nine weeks. These are these are blowoff tops. We've seen this before in the dotcom era and there are shortages but shortages lead to glutes and we think this is the last gasp the last the last takeoff in the AI stocks

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[7:31] for right now, these things are, you know, probably going to be longer gold, longer government bonds, longer emerging markets, you know, and less long US AI stocks and semiconductors at this point.

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[10:24] This is what's called a parabolic move. This is not sustainable... your first correction point is at $320 a share. You're at 600. You're talking about a 50% correction just to get to your first level of support. and and the 50-month moving average is the long-term running support of this rally... this is about a 75% decline in the markets just to get back to that moving average, which it will most likely do.

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[13:44] the semiconductors, you know, they're like, you know, that's that's probably the high you'll see for five years in that group. They're way overpriced.

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[14:04] I think I think the stock prices themselves are telling you the end is not in semiconductors at least. Whether that causes a general market problem remains to be seen.

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[27:32] Lots of growth to come here. We think for years provided these companies are still spending on on capex.

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[14:44] which is why we're very bullish on the Chinese um semiconductor companies.

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[19:25] This is a bad time to be buying semis. Forward returns from this point in the cycle are horrendous... I think forward returns looking at 12 months, 24 months are going to be pretty poor for some.

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[29:09] Uh I think the sevies are going to break sometime in the next 6 months because of this whole artificial intelligence capbacks over overpromising.

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[25:22] I think semi capex has to accelerate and I think you'll see that. I think wafer starts will accelerate

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[9:06] based on this chart, we should be due for a sizable correction in the semiconductor trade.

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[33:51] that's why I'm super super bullish on Chinese semiconductor companies because they are going to power not just China's AI boom, but the global majority's AI boom because nobody trusts America as a steady trading partner right now.

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