r/stockmarket
The Bottleneck Trade
Author questions the bottleneck trade pullback, arguing surging Big Tech CapEx and AI IPOs will keep driving chip demand.
- Big tech companies like Google and Meta are continuously increasing their capital expenditures for AI.
- Upcoming IPOs of major AI firms like SpaceX, Anthropic, and OpenAI will inject more capital into the compute sector.
- The recent sell-off is likely just short-term risk aversion ahead of data releases, not a reversal of the compute bottleneck trend.
Why is the bottleneck trade reversing when CapEX is only continuing to go up?
Google just raised what, 80 billion?
Meta just announced more CapEX…
I wouldn’t be surprised if Amazon and the rest of big tech does the same…
Isn’t most of that money going to be going straight to chips and memory again?
Then on top of that how much are SpaceX, Anthropic, and OpenAI raising when they go public this year?
It’s all going to go to the same place, no?
Bottlenecks for more compute.
Something tells me this most recent sell off was to risk-off for data next week and not because this bottleneck rally is anywhere near over.
Thoughts?
Semis got hit hard this week. Which started with AVGO. While they beat consensus and talked about impressive growth the stock slides and the chip companies came tumbling with it. On top it all off, tech sold off and that spread across the markets.
Analysts were blaming it on economic numbers and weak Fed speech while I bet my bottom dollar that institutions were shorting stocks to perpetuate the slide.
With a drop like this institutions will now go on a feeding frenzy and the markets will go up again.
but will it though ? 😃 i mean a lot of it are non binding agreements and if theres just a slight change in narrative all this AI spending will come down crashing so yeah
But the market still has demand for the debt, atleast so far
Markets have been hot and semis have been parabolic, healthy to take a breath before continuing up... Macro current and future demand is still there
Take what I say with a grain of salt, but I saw a post that the SPR levels have hit the Biden lows as of today June 6. I’m more inclined to think this is the reason, combined with a rate hike. The reason I say this is because precious metals, crypto, oil, AND stocks all went down today. The DXY went up about 1% and the real fear that a recession is coming is affecting the market. SK Hynix got obliterated in their last trading day and kept going in AH. Despite what Mango Unchained tweeted, reality is finally settling in.
I was thinking about that earlier, the money they've diluted will go straight into Nvidia, micron, AMD, avgos etc etc pocket. Big win for the picks and shovels and less of a win for most of mag7.
Pretty sure most of the memory producers for Google TPUs are Samsung and SK HYNIX
Broadcom make the TPUs. Memory comes from all the big 3 including micron
Yes I don’t get the difference in what you’re saying though, isn’t this capex basically just going to end up in the hands of the hardware producers
Big money is trying to manipulate the market by moving around hoping the masses would follow, they failed at oil manipulation in April, then software, now they’re moving into healthcare and finance hoping masses would follow. But the ai/ semi tech run isn’t over. Last semi earnings season it was all record earnings for these companies. And the restart of semi earnings season bottleneck start with micron earnings June 24!!
Spot on. You are one of the few people looking at the actual physical flow instead of panicking over rate hikes.
Our data tracker perfectly maps out your thesis. Hyperscaler CapEx is currently tracking at $132B, and that capital is flowing like a firehose straight into the exact bottlenecks you mentioned: TSMC advanced packaging (+35% YoY load) and HBM (now eating up 28% of all DRAM supply allocation).
The physical supply chain is screaming "structural shortage," but market algos are having a tantrum over macro data. It's a massive mispricing. Let them shake out the weak hands. The bottleneck trade hasn't even peaked yet.