Despite short-term fatigue in the AI trade, the current pullback may offer long-term buying opportunities in high-quality companies. Micron (MU) is a standout pick, demonstrating exceptional strength after doubling its guidance and crushing its earnings report. For investors with long-term conviction, the contracting valuation of Nvidia (NVDA) could present an attractive entry point. Separately, a significant value opportunity was identified in Grab (GRAB), with the speaker personally buying shares below the $5 level. These specific companies are highlighted as strong fundamental plays despite the broader market's caution.

The AI Trade / Data Center Sector

• The central theme of the discussion is the AI trade, which the speaker notes is currently "struggling a bit" and seems "exhausted."
• Market sentiment has turned cautious due to news surrounding Oracle and a private credit deal for a new data center, creating fear that the AI infrastructure build-out might be slowing down.
• Despite the market's fatigue, the underlying financial performance of companies in the sector remains strong. Micron's stellar earnings are cited as a prime example.
• The speaker believes two major trends for 2026 are difficult to bet against:
  • The Fed easing (lowering interest rates), which makes stocks more attractive than cash.
  • AI expanding corporate earnings, which should support higher stock valuations.
• The speaker believes that while the "trade" is tired, the fundamental growth story is intact. Money that has left the sector may eventually return, especially if valuations become more attractive.

Takeaways

• The short-term momentum for AI-related stocks is weak, and the market is sensitive to negative headlines. Expect continued volatility.
• The long-term fundamental case for AI remains strong. The current pullback and contraction in valuation multiples could present buying opportunities in high-quality companies for long-term investors.
• Investors should differentiate between the market's short-term "exhaustion" with the AI trade and the actual long-term earnings growth potential driven by AI, which the speaker believes is real.

Oracle (ORCL)

• The stock was a major focus, dragging down the market after a report that Blue Owl Capital will not back a $10 billion deal for Oracle's next data center.
• Bearish Perspective: The market is concerned about Oracle's financial health.
  • It has a $127 billion debt load, with $25 billion due in the next three years.
  • It is currently running at a negative $13 billion free cash flow and is not projected to be cash-flow positive until 2028.
  • The market is questioning the quality of its $500 billion in "remaining performance obligations" (future revenue), as $300 billion of that is tied to a single customer: OpenAI.
• Bullish Perspective: The deal falling through may not be a major issue.
  • Blackstone (BX) is reportedly in talks to replace Blue Owl as the financial partner.
  • Oracle stated that negotiations are "moving forward on schedule" and they simply selected a different partner.
  • The issue could be that Blue Owl was already over-exposed to data center deals, not that Oracle's project is un-investable.

Takeaways

• Oracle is currently a high-risk investment due to significant uncertainty surrounding its debt, cash flow, and heavy reliance on OpenAI for future growth.
• The market is pricing in the bearish case. Investors should watch for news on whether Blackstone or another partner steps in to finance the data center, which could be a positive catalyst.
• The situation highlights the interconnected risks in the AI supply chain; weakness or perceived weakness in one major player (Oracle) can negatively impact sentiment for the entire sector.

Micron (MU)

• Micron was highlighted as a major positive in the AI sector.
• The company "crushed" its earnings report, doubled its guidance, and showed "through the roof" operating margins.
• The stock was up 7% after-hours on a day when the broader market was down significantly, which the speaker views as a sign of incredible strength.

Takeaways

• Micron is demonstrating exceptional fundamental performance and is a standout in the semiconductor space.
• Its ability to rally strongly on a weak market day suggests strong investor confidence and could signal that it is a high-quality name within the "exhausted" AI trade.

Nvidia (NVDA)

• The stock is mentioned as "struggling to hold $170" despite putting up great earnings.
• The speaker is a long-term believer and is not selling their shares, stating the valuation multiple is becoming "stupid" (attractively low).
• Despite recent struggles, the stock is still up 25% year-to-date and 100% from its April lows.
• The speaker believes that if the stock falls further and the valuation becomes even more attractive, money will flow back into it.

Takeaways

• While NVDA's massive run has stalled, the speaker's long-term conviction remains high. This suggests current holders may want to avoid panic-selling.
• The contracting valuation could make it an attractive entry point for investors who believe in the long-term AI growth story.
• The speaker does not expect the stock to have another massive run-up by year-end, framing the current period as a healthy consolidation after huge gains.

Robinhood (HOOD)

• The stock was used as a detailed example for a hedging strategy, as the speaker considers it the "most volatile" of their major holdings.
• Hedging Example: The speaker, with an average cost of $70 and the stock at $120, sold a January 2027 in-the-money call option with a $100 strike price.
  • They collected $42 in premium per share.
  • This protects their position against a drop all the way down to $78 (current price of $120 - $42 premium).
  • It caps their upside, creating an effective selling price of $142 ($100 strike + $42 premium).
  • This strategy allows the investor to protect gains and defer taxes without selling the shares outright.

Takeaways

• HOOD is considered a high-volatility growth stock.
• For investors holding HOOD or similar volatile stocks with significant unrealized gains, selling in-the-money covered calls can be a powerful strategy to protect against a major downturn (up to 50% in the example) while still allowing for some additional upside.
• This is an advanced strategy, and investors should understand options (specifically covered calls) before attempting it.

Grab (GRAB)

• The speaker mentioned buying 5,000 shares on the day of the recording.
• The reason for the purchase was that the price had fallen to a "really stupid level" below $5.
• This was framed as an opportunity to "DCA" (Dollar Cost Average) into a name the speaker likes at an attractive price, not as a major "buy the dip" signal for the entire market.

Takeaways

• The speaker sees significant value in GRAB at prices below $5.
• For investors who follow the speaker or have a similar thesis on the company, the current price level may represent an attractive entry point or an opportunity to add to an existing position.