The AI Sell-Off Is Happening Again. Here's What I'm Actually Doing
Summary
Couch Investor analyzes the latest CPI report, noting that while the 4.2% inflation rate is high, core inflation was slightly better than expected at 0.2% month-over-month. He anticipates that falling energy prices in the second half of the year will help bring overall inflation down. Regarding the market, he observes a general pullback in AI-related stocks and big tech, which he attributes to headline-driven sentiment rather than a fundamental decline in demand. He specifically addresses rumors of data center cancellations, refuting a report about a project in Wyoming and emphasizing that major players like Google, OpenAI, and Anthropic still face a shortage of AI capacity.
He also discusses the 'SAS apocalypse,' arguing that established software companies with deep ecosystems are resilient against AI disruption because they have the capital to reinvest in the technology. He highlights that many of these companies are seeing growth re-acceleration. Finally, he previews Oracle's upcoming earnings, noting the critical importance of their massive backlog and the need for the company to show margin improvement despite high debt levels.
Mentioned Stocks
Reasoning: He suggests that Google is becoming a potentially very good deal during the current market pullback. He explicitly mentions that price levels between $300 and $320 would be a very attractive entry point.
Reasoning: Couch Investor includes Adobe in the group of software companies that have successfully built ecosystems. He believes these companies are using their high profitability to invest in AI and avoid disruption, leading to a growth re-acceleration.
Reasoning: Couch Investor is positive on the stock following strong monthly metrics and success in prediction markets, noting its 6.2% price increase as a sign of strength.
Reasoning: Couch Investor is waiting for the earnings report to see if Oracle can recognize its massive $552B+ backlog and improve margins. He is cautious due to the company's high debt and negative free cash flow, but sees potential if the AI narrative holds.