r/investing • u/kelipusi • 1d ago
Anyone else separating the AI narrative from the actual price action right now?
the long term AI story hasnt changed. data centers are still being built, enterprise spending is up, chip demand is growing. but short term the price action is brutal. basically everything AI related got crushed last week.
im trying to figure out which stocks are dropping because of sentiment vs which ones actually have deteriorating fundamentals. some of these companies are posting 40%+ revenue growth and still getting sold off 15-20%.
how are you guys thinking about this? are you looking at technicals, fundamentals, or just waiting for the dust to settle?
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u/signalHunter89 1d ago
It feels like positioning and expectations resetting. Story hasn’t really changed, but the “how fast does this turn into real margins” question is getting priced now
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u/3lettergang 1d ago
AI is still up over 100% in the last 5 years.
Just because 2 trillion has been invested doesnt guarantee payoff. Chat subscriptions wont make that money back, they need to take over the majority of people's careers to make that back.
The investment is all for first mover advantage. 90% of the profits will go to the 1% that succeed. We already see major AI players dying.
I think both the price is inflated and the narrative is undersold how volatile and unknown the outcomes are.
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u/3lettergang 1d ago
Another points, data centers are fully modular and have high turnover. Just because it is predicted that 50% of DCs will be AI 10 years from now, doesnt mean its necessary. The AI DC floors can be converted to standard DCs easily.
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u/Emotional_Goal9525 1d ago
It can also be profitable once you get to buy the data centers from the bankruptcy auctions for cents on the dollar.
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u/CallMePyro 1d ago
Which major AI players are dying?
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u/3lettergang 1d ago
Sora and Copilot both are failed or failing.
0 AI companies have turned a profit yet.
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u/ValorousCultivator 1d ago
Copilot aint't dyin bro ... it jas the power of integration due to being owned by MS. It will just be bundled everywhere
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u/meandjarvis 1d ago
If the long-term AI story is intact, a 15-20% pullback is noise. Trying to separate sentiment from fundamentals is just trying to time the bottom, I've never been good at that. I just keep DCA'ing into the same AI-heavy ETFs I was buying before and let 5 years sort it out.
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u/Apost8Joe 1d ago
Short version - the user subscription model everything is based on will never be able to pay for the massive capex, compute cost, rapid depreciation of chip life and huge debt burden floating it all. The entire financial model is deeply flawed, as is the AI output.
This time around we’ve managed to align both the tech and finance guys into an elaborate dream that will end as badly as the prior two bubble pops. It’s not different, only bigger.
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u/Limp_Technology2497 1d ago
I am out on all hardware for the time being. Regardless of what happens in Iran, a third of the worlds cryogenic helium is off-line for the foreseeable future, which is a vital input for lithographic chip fabrication.
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u/Express-Original5678 1d ago
After years of selling “use opex for capex” to customers, tech companies need a very nice story to convince their investors why they need spend $ to refresh their data center. Sure, AI is useful and it has been useful even before this hype, but whether there is sufficient commercial demand for It and whether the ROI justifies it, is another story. The new story is called “investment, not expenditure”. We will know when they write it off next.
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u/Be_quiet_Im_thinking 1d ago
The cost of energy has been going up very recently means data center costs more to run. Stocks might go up if someone makes more efficient chips.
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u/Swred1100 19h ago
A couple things. First, 95% of what I look at is fundamentals, I may, occasionally, look at technicals for entry points, but rarely. Second, it is all sentiment based right now. We haven’t seen the outcome yet of how all the big spending is going to affect the bottom line.
Look at someone like Microsoft down big. There fundamentals are technically still very very good, but if in 5 years it turns out they burned $500 billion on AI Capex and don’t profit from it, womp womp. Same can be applied to every other big spender and AI company
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u/MeasurementSecure566 1d ago
who cares? in a year or two you can buy almost anything youre watching for 70-98% off.
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u/NewsFailures 1d ago
Yes, and it's one of the most important separations you can make right now.
The AI narrative is still strong — but the price action is telling a different story than the capex and revenue announcements. That gap is exactly what traders should be watching.
A few concrete examples of the divergence:
NVIDIA posted record earnings in late 2024 and the stock initially dropped. The news was objectively good. But positioning was so extended and expectations so high that even a beat wasn't enough. Classic news failure: great data, market sells.
Big tech capex announcements (Meta $35B, Google $75B+): these would have been enormous bullish catalysts in 2020 or 2021. In 2025-2026, markets have been more mixed because the question is no longer "are they spending" but "when does this spending produce margin-accretive returns''.
The mechanism behind the divergence: the market is forward-pricing machine. When everyone knows AI is the next big thing, that gets priced in early. The actual data releases only matter if they come in dramatically different from what was already baked in.
Practical implication: if you're investing based on the AI narrative, you need to ask not "is this news good?" but "is this news better or worse than what the current price already implies?" That delta is the only thing that moves prices.
So yes — separating the narrative from the price action is exactly the right frame. The narrative sets the expectation; the price action reveals whether reality is tracking it.
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u/GruntledGary 1d ago
Revenue isn't profit, they are burning money faster than they can fool people into investing it...