Given a couple of my friends misunderstood my short tweet yesterday, let me clarify. My post on Hynix was to acknowledge a datapoint for those calling THE TOP of the AI cycle. I believe it is important as an investor to not just focus on what is supportive of your investment case but even more so to focus on what is directly against it, especially if it is a universally acknowledged loved idea like AI. Having said that, let me be clear. I still strongly believe this is a “speedbump” which is what I have been writing about since my original post on June 20th. But a “speedbump” can be ugly as I have pointed out before. Starting in both late 1995 and 1997 there were drawdowns of over 50% in the semiconductor index. But the semi index finished up roughly 850% from the end of 1994 to the peak of the internet buildout in March of 2000 despite this. Also back then, those drawdowns had fundamental drivers. In 1995, Windows 95 did not lead to the upgrade cycle expected and companies were sitting on a bunch of DRAM inventory. Intel wrote off about $1B in DRAM inventory as an example. There is no excess memory inventories on balance sheets today. In 1997, the Asian currency crisis forced a slowdown in end-demand. The Iran war and continuation of the Ukraine conflict are both disruptive but there is no general slowdown in demand being caused by them that I can see. From a technical standpoint, I believe forced liquidations and margin calls in both retail accounts and hedge funds that typically run with leverage over the past couple of weeks is leading to a technical bottom. From June 22nd, the peak of the momentum trade, the S&P is down only 2.1% and the Nasdaq is down 6.6%. But the SOX index (the tip of the spear in the AI trade) is down 28.6%, the Morgan Stanley Momentum Index is down 38.0% and their Momentum TMT (tech, media and telecom) Index is down 53.5%. The ferocity of these moves in roughly one month has never been seen before in some cases. I believe this has sped up the cleansing process with prime brokers not wanting another Archegos situation. From a fundamental standpoint, the advent of Agentic AI started arguably at the end of January 30th with the formalization of OpenClaw. This requires 10-100x more tokens than chat-based AI. No question that token minimization is going on at the top 1% of companies which was the main reason for my speedbump concerns but the other 99% are still ramping. In summary, my view is that we could have seen at least a short-term bottom today with a strong rally ahead of us in the sectors most caught in the latest speedbump. Time as always will tell.