Negative rumors about the ARR metric in the AI sector resurfaced in the market yesterday. This wasn’t news to me, though—I discussed it with Mr. Huang last Saturday. My assessment at the time was that this often comes down to differences in how the figures are calculated. As I shared in the group yesterday, I didn’t sell my positions out of momentary panic.
I did notice, however, that many retail investors chose to exit their AI semiconductor positions at a loss yesterday, with some even turning around and shorting the sector. Setting aside the sector’s fundamental support and its current low valuations, many retail investors and KOLs don’t actually calculate fair value when they invest. They rely solely on price action and candlestick charts to make decisions, and that simply isn’t enough. This is especially true with the midterm elections approaching: shorting AI technology, which has the full backing of the U.S. government, is hardly a wise move. In this situation, your true counterparty is the dominant force behind the U.S. stock market—the U.S. government. If the AI growth narrative comes to an end, the U.S. economy will also take a heavy blow, so the authorities have every incentive to turn around any unfavorable situation.
Truly going with the trend doesn’t mean following the personal opinions of some retail investors or a handful of KOLs. It means keeping up with the broader trend and embracing the AI industry, which is closely tied to the U.S. economy and related sectors. Even if there is a bubble in AI, it certainly isn’t right now—especially not in the run-up to the midterm elections. In short, October is a critical juncture, and it’s unwise to take an overly bearish stance on AI.
I did notice, however, that many retail investors chose to exit their AI semiconductor positions at a loss yesterday, with some even turning around and shorting the sector. Setting aside the sector’s fundamental support and its current low valuations, many retail investors and KOLs don’t actually calculate fair value when they invest. They rely solely on price action and candlestick charts to make decisions, and that simply isn’t enough. This is especially true with the midterm elections approaching: shorting AI technology, which has the full backing of the U.S. government, is hardly a wise move. In this situation, your true counterparty is the dominant force behind the U.S. stock market—the U.S. government. If the AI growth narrative comes to an end, the U.S. economy will also take a heavy blow, so the authorities have every incentive to turn around any unfavorable situation.
Truly going with the trend doesn’t mean following the personal opinions of some retail investors or a handful of KOLs. It means keeping up with the broader trend and embracing the AI industry, which is closely tied to the U.S. economy and related sectors. Even if there is a bubble in AI, it certainly isn’t right now—especially not in the run-up to the midterm elections. In short, October is a critical juncture, and it’s unwise to take an overly bearish stance on AI.