$MSFT,GOOGL,AMZN,META - Jim favors hyperscaler stocks over semiconductor stocks, arguing they will outperform in two of three scenarios: if enterprises start generating returns from AI, or if hyperscalers moderate CapEx spending to improve free cash flow. These stocks have significantly underperformed despite being positioned to benefit from AI economics normalization.
Bearish:
$NVDA,AMD,AVGO - Jim argues semiconductor stocks are vulnerable because all economic value has accrued to them while companies upstream lose money - an unprecedented and unsustainable dynamic. He believes the market is overly bullish on semis and that they will underperform hyperscalers in two of three future scenarios as AI economics must eventually normalize.
$AIMODELS - Jim and George highlight that AI model companies and enterprises implementing AI are losing significant money, with economics getting worse rather than better over time. The gap between C-suite expectations and actual worker productivity gains suggests returns may not materialize as expected, and competitive advantages from AI deployment may be fleeting as they get competed away into consumer surplus.