Big tech is dumping $84B into AI infrastructure — buy the chip equipment makers
Thesis
AI demand is so strong that even Alphabet can't keep up, prompting them to raise a historic $84.75 billion to fund infrastructure. Meanwhile, Microsoft is having its worst month since 2000, showing that the big tech buyers are under pressure. The smart money here is in the companies selling the picks and shovels: Lam Research just had its price target raised by $150 as chip equipment spending heads toward $250 billion. When the big tech stocks drop on valuation concerns, chip equipment makers like LRCX offer a way to profit from the same AI buildout without paying the premium for the big tech names.
Strategy approach
Build a rule-based strategy that enters long LRCX on D1 when GOOGL or MSFT makes a 1-day drop greater than 1.5% while LRCX remains above its 50-day moving average. Also enter long if LRCX makes a 20-day high on the same day GOOGL or MSFT drops. Exit after a 21-day max hold or a 6% trailing stop.