The Third Wave of AI: Why It’s Time for Investors to Pivot From ‘Infrastructure’ to ‘Efficiency’

Investors have likely noticed a recurring pattern recently: The moment the slightest negative news hits the market, the semiconductor sector and U.S. indices instantly go into a deep dive. First, we saw sharp selloffs on news from Broadcom (AVGO) and SpaceX (SPCX). Most recent was a staggering 10% collapse in South Korea’s KOSPI Index ($KSIC), which ricocheted and hit the Nasdaq ($NASX). In my opinion, this hypersensitivity is a clear diagnosis. The market is overextended to the limit, sitting on a powder keg of margin positions, and major players now need literally any excuse — no matter how insignificant — to lock in profits.

These dramatic cracks in the global semiconductor complex are more than just a technical correction. In my view, they represent a fundamental shift in the market regime. For the past two years, investing in artificial intelligence (AI) has been a straightforward, one-way bet. Investors bought the companies building the hardware. Today, this trade seems to have reached its limits.