AI doubters have their moment

Markets seem to be listening to AI doubters, for now. The remarkable observation is that doubters have been loud and clear since September 2025, including AlphaValue’s modest voice. If European market observers had then a sense of unease, it must have been felt well before by US market professionals. It implies that markets are seemingly cooling down on a more than 12-month uninterrupted AI triggered speculation.

In this moment of cooling, rather obvious comments can be reiterated:

The first and most important is that debt markets are always calling the shots. We knew and wrote that Google going to the bank to match negative FCF would be a tipping point. It happened, and the initially cosy spreads on the funny SPVs aimed at pushing capex off balance sheet are fast moving into junk territories. With clarity on risk and thus less no-question-asked debt funding of an industry with no demonstrated business model, the hoovering of capital from unsuspecting retail hands will most likely be more difficult too.

The second is that Semiconductors, astounding technologies as they are, are as much in a hog cycle as they have ever been. Every half lucid investor knows that 60% quarterly price increases mean that buyers, whether rich from AI circles or poor from ordinary industries, are walking away. If AI processing demand is slowing one inch and if resulting semis demand slows down by a sliver of an inch, a crash of biblical proportions should be the natural outcome.

Of course holders of Semis stocks tend to gear themselves to the hilt as they bet the house, so that a biblical crash does not start to describe the extent of the looming correction. Say 30% if late 2024 valuations are a proper anchor.

Correction? May not be brutal