AI Capex Cycle and Market Risks (with Matt Miller; Dani Burger)

12/24/2025 5:18:35 PM	medium term cautious up	20 days later	-0.38%	-0.19%
11/3/2025 10:40:01 PM	short term up	6 days later	+0.69%	+0.69%
10/15/2025 10:43:07 PM	short term cautious up	5 days later	+1.91%	+0.95%
8/20/2025 7:15:16 PM	short term cautious down	5 days later	+1.65%	-0.83%

Plays a clip of Jim Chanos comparing the AI capex boom to the dot-com crash, and asks if we could see similar earnings drops next year.

Matt Miller

Cameron Dawson

It will eventually happen because any cyclical boom has a pull-forward of demand. Semiconductor margins are up 17 percentage points in the last nine months, which is unprecedented and unsustainable. History suggests that once demand ebbs, margins cannot be sustained.

Companies enjoying those margins are adding capacity (e.g., Micron building new capacity for 2028/2030). Eventually margins will peak, suggesting earnings will peak. Semiconductors are growing earnings by over 100% this year, which is not sustainable.

Asks if the change in semiconductors from a cyclical to a secular growth story due to AI makes this time different.

Dani Burger

Cameron Dawson

There is a big difference between a super cycle and something being non-cyclical. Gravity applies. The more you go up, the bigger the downside. These businesses have high operating leverage, which works both ways.

Year to date, 30% revenue growth has led to 72% growth in forward earnings due to operating leverage. This leverage will bite on the way down.

Asks if we are seeing ROI from AI in earnings calls beyond the hyperscalers.

Matt Miller

Cameron Dawson

Not necessarily. There is a huge chasm between code being written with AI and code being deployed. We are not seeing the ROI show up in corporate margins from AI usage. The margin expansion in the S&P 500 is from the AI infrastructure buildout, not a productivity boom.

Mike Goldstein showed a chart illustrating the gap between AI-written code and deployed code. A lot of tokens are being used without deployment because of the need for human involvement.

Asks for advice for an investor with new cash, given the incredible gains in names like SpaceX.

Matt Miller

Cameron Dawson

We see a lot of high-quality, dividend-paying names with strong free cash flow that have sat out this rally. It's a great time to revisit the quality theme as a factor within portfolios because it has lagged. When volatility comes into high-flying names, these quality areas will be more stable.

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