The debate over AI overheating is shifting from a singular collapse theory to a sectoral rotation theory. Software, silver, and semiconductors are creating different waves of overheating and adjustments within the AI market. Josh explains that the AI bubble will not burst all at once but will follow a sequential flow by sector, defining it as a 'chain reaction bubble.' Software is mentioned as the first example, where expectations that AI will become a productivity tool drove stock prices up, but the perception of threats to the SaaS model has since changed the trend. Silver saw price stimulation due to increased power demand from data centers, but it was assessed as excessive movement considering the existence of other conductors. In the semiconductor sector, while investors expected high margins, Josh stated that normalization could occur depending on the balance of supply and demand. As the burden of AI capital investment grows for big tech, there is a possibility that by 2027, the capital expenditures of Microsoft, Alphabet, Amazon, Meta, and Oracle could exceed their free cash flow. Morgan Stanley argues that investments in AI infrastructure can generate high returns, suggesting that large tech stocks may have room to absorb short-term burdens. Within BCA Research, perspectives on the potential spread of AI value are divided. Josh mentioned that if AI and blockchain synergize, crypto could be the next candidate.
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