Public trading strategy
Chips stumble but AI software shines on Palantir-Nvidia deal — long PLTR
Thesis
The market is seeing a major rotation inside the tech sector. While semiconductor stocks are dragging the Nasdaq down due to supply glut fears, AI software stocks are catching a bid. Palantir's collaboration with NVIDIA on Sovereign AI is a concrete revenue catalyst that validates their software platform. This creates a great pair trade: go long the AI software winner (PLTR) while shorting the struggling hardware sector (SMH) to isolate the software momentum from broader tech weakness.
Strategy approach
Build a long/short pair strategy: Enter long PLTR and short SMH (Semiconductor ETF) on D1 when PLTR outperforms SMH by at least 5% over a rolling 5-day period. Exit the trade if the 5-day performance spread narrows to less than 1%. Use a 20-day max hold.