Summary

• Semiconductor stocks, including Nvidia, are in a massive bubble reminiscent of the dotcom era, driven by cyclical demand, circular deals, and unsustainable valuations.
• AI industry profits are inflated by circular capital flows—hyperscalers fund AI startups that, in turn, commit to large cloud purchases, masking underlying weakness.
• U.S. hyperscalers face deteriorating balance sheets due to aggressive CapEx, debt issuance, and dilution; I have reduced my exposure.
• I am reallocating capital to stable, non-AI businesses like McDonald's, S&P Global, Netflix, Hermès, Ferrari, Booking, and Accenture, favoring predictable cash flows over speculative AI growth.

The bulls have made it very clear: this is not like the dotcom bubble. AI companies have seen their valuations rise, but it is all justified by improving fundamentals. They all make real profits and the demand for AI

Analyst’s Disclosure: I/we have a beneficial long position in the shares of META, GOOG, RACE, HERM:CA, MCD, SPGI, ACN, BKNG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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