New Position

Long some calls into the most hated corner of the market.

Okay, I put a trade back on. Yes, back on. I tried this one a few months ago and it didn’t work. I was early, which with options is just a slower way of saying wrong.

This time it’s two names, calls on both, together a little over ~10% of the portfolio.

I genuinely can’t think of a more hated corner of the market right now. Actually, hated might be generous. Hated implies people are paying attention. These names are just ignored, for now.

Every dollar in the world is chasing the AI bottleneck trade, memory, power, anything with a supply constraint attached to it, and that trade is sucking capital out of everything else. This group sits on the wrong end of that rotation. Money has been walking out the door for months, and a buyer base that supported these names for years recently flipped to net selling for the first time in years.

The index that tracks this group is down more than ~30% from its highs and some of the biggest names in it just traded at their lowest levels since early 2025.

The funny part is that the two biggest names in this corner are about as clear AI beneficiaries as you'll find anywhere. Actual AI revenue growing fast, with real usage behind it, and the market refuses to pay for any of it for reasons that have nothing to do with the businesses themselves.

I've watched enough of these rotations to know how they usually end. The crowded trade gets more crowded, the ignored stuff gets cheaper, and it feels permanent the whole time. Then the valuation gap gets stupid enough that people start looking around. I think that point is very very close.

Now obviously “cheap” alone didn't get me back in the trade. It was cheap a few months ago too and the market did not care. What changed is the buying. There's a very specific buyer showing up in these names every single trading day right now, and the pace picked up noticeably in the last couple weeks.

I got burned last time, and part of that was on me. I didn't buy enough time, so when the trade needed a few more months to work, I didn't have them.

Though in fairness, I'm not sure anyone saw the kind of route these names went on from there coming…