Oct 27, 2026 · 37 min
AI spending fears test tech valuations
Tech bubble will pop in 2027
The episode examines whether slowing memory momentum, credit risks, and opaque AI economics could turn a technology pullback into a broader repricing.
- 1Investors are reassessing AI infrastructure spending as hyperscaler commitments, credit concerns, and potential defaults raise the cost of optimism.
- 2Micron’s strong results may mark a peak in DRAM pricing, making upcoming semiconductor and storage earnings especially important.
- 3Anthropic’s anticipated IPO sharpens questions about AI-company profitability, reporting practices, and valuations relative to OpenAI.
Don't miss
Sara Awad compares Anthropic with OpenAI while questioning how AI companies present profitability and whether their valuations can hold.
The brief
Sara Awad joins Rena as technology stocks sell off, with investors questioning AI infrastructure spending, hyperscaler commitments, semiconductor exposure, and rising credit risk.
The discussion argues for selective stock picking: lender concerns, possible defaults, and red flags around the AI build-out matter as much as headline growth.
Micron’s quarterly strength in DRAM sales, pricing, and margins looks impressive, but Sara warns that memory pricing may already have peaked.
Upcoming results from SK Hynix, Seagate, and other technology companies will test the memory and storage cycle, including Seagate’s margins versus Western Digital’s.
The episode’s sharpest valuation question arrives with Anthropic’s anticipated IPO: how does its position compare with OpenAI, and how durable are AI profits?
The broader takeaway is that capital-expenditure plans and financial presentation deserve scrutiny before investors treat every AI-related dip as a buying opportunity.
What was said on this episode
32 statements · 6 positive · 24 negative · 2 neutral
- Sara Awadon NeoCloud companiesNegative6:58
NeoCloud companies’ business model is fundamentally flawed
“the business model itself is flawed”
Listen at 6:58
- Sara Awadon NeoCloud companiesNegative7:42
NeoCloud companies are unlikely to re-rate meaningfully higher long term
“we don't see these guys being meaningfully re-rating higher for the longer term”
Listen at 7:42
- Sara Awadon AI bubbleNegative8:00
The broader AI bubble will pop in 2027, not this year.
“But to us, the bubble pop is going to happen in 2027, not this year”
Listen at 8:00
- Sara Awadon AI bubbleNegative8:01
The AI bubble will pop in 2027, not this year
“the bubble pop is going to happen in 2027, not this year”
Listen at 8:01
- Sara Awadon NPO and CPO opticsNeutral8:35
The semiconductor industry is shifting toward NPO and CPO optics
“the industry is moving towards NPO and CPO, near package optics and co-package optics”
Listen at 8:35
NPO and CPO adoption will position Lumentum and Coherent favorably by late 2027.
“that inherently positions Lumentum and Coherent in a good position heading into second half of 2027.”
Listen at 8:43
- Sara Awadon Custom ASIC projectsPositive10:33
The industry will shift toward more custom ASIC projects.
“this confirms our idea, for starters, that yes, the industry is going to shift towards more custom ASIC projects”
Listen at 10:33
- Sara Awadon Custom ASIC projectsNeutral10:35
The AI industry will shift toward more custom ASIC projects
“the industry is going to shift towards more custom ASIC projects”
Listen at 10:35
NPO and CPO adoption will eliminate Marvell’s DSP sales by mid-2027.
“I think, you know, come mid-2027, we got to rethink that because of that shift towards NPO and CPO, because that's essentially going to eliminate the DSPs that Marvell sells”
Listen at 11:48
NPO and CPO adoption will eliminate Marvell’s DSP market by mid-2027
“come mid-2027, we got to rethink that because of that shift towards NPO and CPO, because that's essentially going to eliminate the DSPs that Marvell sells”
Listen at 11:49
Investors will shift away from NVIDIA and become more cautious in 2027.
“come 2027, as that ASIC narrative shifts, I think we shift more away from NVIDIA and we grow more cautious there”
Listen at 12:57
NVIDIA will be re-rated as ASIC players gain market share
“the industry is going to have to re-rate NVIDIA on this new reality that... Again, it's sharing the market with the ASIC players”
Listen at 13:05
- Sara Awadon AI bubble popNegative13:55
The major AI bubble pop will result from financing running out, not demand weakening.
“That's where we see, you know, the big pop happening. We see that happening more from the money running out rather than necessarily demand actually being impacted.”
Listen at 13:55
- Sara Awadon AI bubbleNegative13:58
The AI bubble pop will result from funding exhaustion, not demand loss
“we see that happening more from the money running out rather than necessarily demand actually being impacted”
Listen at 13:58
- Sara Awadon AI demandNegative14:31
Current AI demand is not durable or sustainable
“it's not a durable, sustainable kind of demand profile”
Listen at 14:31
- Sara Awadon AI bubbleNegative16:01
The AI bubble pop is expected in 2027.
“the bubble pop to us is a 2027 story.”
Listen at 16:01
- Sara Awadon Micron and Western DigitalNegative16:41
Fundamentals no longer support buying Micron or Western Digital on pullbacks.
“a lot of the investors today are jumping into buying names on the pullback like Micron, like Western Digital, which I think fundamentals no longer really support.”
Listen at 16:41
- Sara Awadon DRAM pricesNegative17:37
DRAM prices may have peaked
“perhaps DRAM prices have peaked”
Listen at 17:37
Micron’s memory business currently has a higher risk profile as price increases moderate.
“the quarter's results do confirm that, specifically if we look at the sequential growth. To us, that memory kind of story is at a higher risk profile right now.”
Listen at 18:26
- Sara Awadon Memory-chip stocksNegative21:51
Memory-chip stocks currently carry elevated downside risk
“we think that there's higher risk on the memory trade”
Listen at 21:51
- Sara Awadon Memory stocksNegative21:55
Investors should not buy memory stocks on the current dip.
“this is not a time that we would recommend going into the memory, buying the memory guys on this kind of dip.”
Listen at 21:55
- Sara Awadon PC market contractionNegative23:28
The PC market contraction will negatively affect memory companies.
“the PC market crash is going to be felt by everyone, including memory.”
Listen at 23:28
Apple will be better positioned than peers amid higher component costs.
“it's going to be better positioned than the bunch during this kind of higher component cost.”
Listen at 25:04
- Sara Awadon Western Digital and SeagateNegative29:01
Western Digital and Seagate face increasing concerns from capacity expansion
“we become more concerned, both about Western Digital and about Seagate”
Listen at 29:01
Intel cannot sustain CPU price increases indefinitely.
“longer term, we're not big fans of Intel because you can only increase prices for so long.”
Listen at 31:12
Intel is unattractive as a long-term investment
“we're not big fans of Intel because you can only increase prices for so long”
Listen at 31:13
Intel cannot sustain CPU price increases indefinitely
“you can only increase prices for so long”
Listen at 31:15
- Sara Awadon ARMPositive31:31
ARM will become the industry’s preferred CPU architecture.
“The CPU of choice, this is something I think we discussed in a bit more detail last fall, is going to be ARM.”
Listen at 31:31
- Sara Awadon Apple component productionNegative33:31
Apple’s component-production cuts reflect a shrinking market from high costs.
“I think this is Apple just responding to what we outlined earlier, which is an overall shrinking TAM against these super high component costs that have been trickling out.”
Listen at 33:31
Anthropic is currently better positioned than OpenAI.
“Anthropic is definitely in a better position than OpenAI.”
Listen at 34:15
Anthropic is currently better positioned than OpenAI
“Anthropic is definitely in a better position than OpenAI”
Listen at 34:15
Anthropic is using increasingly creative profitability reporting
“they're getting more creative with how they are, you know, in terms of their reporting style, in terms of how they're showing profitability”
Listen at 34:27
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Books & mentions
Tech Contrarians
The related public podcast and sector content extend the episode’s contrarian technology-investing analysis.
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