AI spending worries crush Big Tech while chip suppliers boom — long the real AI
Thesis
The 'Magnificent Seven' tech giants lost $2.3 trillion in value in June because investors are questioning their massive AI spending. However, the physical chipmakers like Micron, Intel, and AMD just added $2 trillion in value during the exact same quarter. This combination suggests investors aren't abandoning AI; they are just shifting their money away from the expensive software giants and into the hardware suppliers who are actually seeing the direct revenue growth. If we see another rocky month for the big tech stocks, the chipmakers are likely to be the safe haven for tech investors.
Strategy approach
Build a long-only momentum strategy on MU, AMD, and INTC using a daily (D1) timeframe. Enter when the stock's 20-day Simple Moving Average crosses above its 50-day Simple Moving Average. Exit if the stock drops 8% from the entry price or if held for a maximum of 30 days. Filter entries to only execute when the Nasdaq 100 (QQQ) is down on the day.