Harvest's Paul Meeks on AI opportunities: Focusing on AI infrastructure trades for the rebound

Key Concepts:

• AI Infrastructure: Hardware and semiconductors supporting AI development.
• AI Inferencing: The process of using trained AI models to make predictions or decisions on new data.
• Deep Tech: Advanced technology based on significant scientific or engineering challenges.
• Trough: The lowest point in a stock's price cycle.
• Technical Analysis: Analyzing stocks based on price and volume trends rather than fundamental factors.

Market Overview and Core's IPO Performance:

• The initial enthusiasm for AI stocks has cooled somewhat, evidenced by Core's disappointing IPO debut on Friday.
• Nvidia is currently down about 4%.
• Paul Meeks, CIO at Harvest Portfolio Management, acknowledges Core's poor performance, noting he was a private investor and is now "slightly underwater."
• Meeks anticipates Core's stock will recover as the company begins reporting results, likely by mid-summer.

AI Infrastructure Investment Strategy:

• Meeks is focusing on AI infrastructure trades for a potential rebound, believing a select group of stocks will recover.
• He acknowledges that the AI infrastructure sector has previously benefited from a rising tide lifting all boats, but now a more selective approach is necessary.
• He is currently employing technical analysis to identify when these stocks have bottomed out ("trough") before buying or adding to positions.
• He is less focused on current fundamentals, anticipating their eventual recovery.

Impact of Tariffs and Market Outlook:

• Upcoming tariffs (expected announcement on Wednesday) are likely to negatively impact the market in the short term.
• Meeks sees potential opportunities in the AI sector despite the broader market concerns.

Deep Tech and Open Models:

• The discussion addresses the potential impact of deep tech and open AI models on the demand for AI infrastructure.
• The question is raised whether the availability of these models from entities like China and the United States could reduce the need for expensive proprietary AI systems.
• The concern is whether there is an overbuilding of AI infrastructure.

Jensen Huang's Perspective and the Future of AI:

• Meeks references Nvidia CEO Jensen Huang's view that lowering the cost of AI technology through deep tech and other models will ultimately increase demand.
• Huang believes that the next phase of AI, inferencing, will drive significant demand for computing infrastructure.
• Meeks agrees with Huang's thesis, suggesting that increased demand for computing intensity will lead to a better situation in the long run, even after the current market turbulence.

Conclusion:

Despite the recent cooling of AI stock enthusiasm and concerns about market headwinds, Paul Meeks remains optimistic about the long-term prospects of the AI infrastructure sector. He is employing a technical analysis-based strategy to identify buying opportunities in select companies, anticipating increased demand for AI inferencing and computing power in the future. He believes that the availability of deep tech and open AI models will ultimately drive greater adoption and demand for AI infrastructure.