AI hardware giants are getting tossed out with the tech sell-off — long TSM and
Thesis
We are seeing a divergence between AI business results and market pricing. TSM just demonstrated its crucial role in the AI supply chain with strong earnings, and Micron upgraded its revenue forecast so significantly that analysts are questioning if it could be worth $2,500 per share. However, both stocks are falling because the broader market is panicking. With even non-hardware tech stocks like Palantir down 30% this month out of general fear, the market is selling everything tech-related indiscriminately. This creates an opportunity to buy the actual winners of the AI boom at a temporary discount.
Strategy approach
Build a mean-reversion strategy on D1 timeframe. Enter long TSM and MU when the stock has dropped 5% over 3 days while the Nasdaq (QQQ) also drops 2% over the same period. Exit when price crosses back above the 10-day simple moving average, or after a 21-day max hold, or with a 8% stop loss.