r/stocks
Any big balls betting on hyperscalers before the Q2 earnings?
Questions bearish consensus on hyperscalers; steady capex and clear AI ROI in Q2 earnings could trigger a contrarian rally.
- The bearish narrative on AI capex might be groupthink, presenting a contrarian buying opportunity.
- Steady capex guidance in Q2 earnings could reverse the current trade, boosting hyperscalers.
- Clear ROI in financials from AI investments will help justify the heavy spending.
- AI capex is burning cash with no clear ROI, and rising memory/power costs could hurt cloud margins.
- High memory prices could lead to consumer device inflation, sparking political and regulatory scrutiny.
Feels like the current narrative is pretty simple
AI capex bad. RAM/HBM/power/data centers too expensive. No clean ROI on AI capex. Hyperscalers are just burning cash. Why bet on them when you can bet pick & shovel companies with high margins. I get the bear case. It’s not dumb.
If memory prices keep ripping, every AI build gets more expensive. Cloud margins can get hit. Devices can get more expensive. Eventually normal people get pissed because their Xbox & iPads now cost more.
But I’m wondering if this is becoming groupthink now and what can shift the narrative on hyperscalers.
Earnings are just round the corner. We will get numbers on q2 and forward guidance. If the capex guidance stays steady from increasing, that minor change alone could reverse the trade where we see hyperscalers go up and memory, chip & storage stocks go down. Seeing clear ROI in financials will also help.
One another blind spot for memory bulls: if RAM/HBM prices get too stupid, DOJ/FTC could start sniffing around. Not because high prices are illegal, but because DRAM has had price-fixing history before. If Apple/Microsoft/Dell/etc. start blaming memory costs for popular consumer devices inflation and consumers get mad, politicians may ask questions.
Betting on hyperscalers is the clear contrarian trade right now. Obviously being contrarian doesn’t always mean more upside. Anyone buying MSFT/GOOG/AMZN/META/ORCL here? What will change the narrative on hyperscalers?
The problem is, if hyper scalers don’t win (some serious scaling ROI) - capex suppliers sure as shit won’t be seeing repeat business. (Maintaining growth trajectory valuations)
Bizarre that two conflicting narratives are existing at the same time.
Or maybe only one narrative remains and there is a lead / lag effect …
This is the reflexive nature that people who are still extremely bullish on memory and compute fail to understand ( or maybe they understand well but intentionally trying to pump)
Yes they have performed spectacularly as hyperscaler started hoarding the next hardware component ( accelerators to compute/storage) . But at current level of spend, at least 500 billion of the revenue in 2026 from Samsung,hynix/micron are going to be from hyperscalers… if the hyperscaler capex is estimated to be 700-750 billion that doesn’t leave much to anything else
And to grow that rev willl depend on fast capex expansion… I’m pretty confident
1) you are going to see much slower growth, if any ( I mean from 2022 to 2026 it’s basically up 700+ %) with cash constraints and if stock tank more
2) power and cooling bottlenecks is next, as they clearly haven’t actually start to fit out much but just hoard/corner
So capex will rotate elsewhere because they need to
There is a reaaon why Micron is trying desperately to lock down long term multi year commitments at current high prices ( if it’s all rosy and they believe demand is no longer cyclical they wouldn’t care as much )
Is micron desperately trying to lock the contracts or hyperscalers are? That’s the question.
If micron makes up a large part of my portfolio, I will say the hyperscalers are desperate.
If hyperscalers are a large part of my portfolio, I will say micron is definitely the desperate one.
Ive been buying a bit of each of MSFT, META, AMZN, and GOOG.
Yea. Just noticed OP snuck ORCL in that list.
a rare good take on reddit
Semis and software are in this strange tug of war. My portfolio has gone nowhere the past month. All my semi gains get cancelled by software losses.
META / MSFT are trading at forward P/E of 17-20 compared to Waste Management's 26.
They're cheap on a trailing 12 month basis too.
MSFT seems most undervalued right now
An iPhone is going to cost more, even if the government regulates price on memory, your iPhone is still going to cost more and people will still buy it. Considering Trump has Micron shares, he's not going to do anything.
How much more can get they knifed before they pull back capex? I have to think that the first one to cut capex (Microsoft?) will be rewarded by market
Or they are punished because they will lose the ai race and already spent all this money
Meta AMD ball and chain is a fun narrative. I personally think meta will do whatever it takes to get AMD to 600 for warrants to mature at an insane clip.
More concerned with PCE pre market and seeing if you get leg up then another drawdown.
This is how delulu I am- I think trump attempts to pump into official 250th to distract, I just don’t know if the market gives a fuck this time considering…it doesn’t have to?