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Look, I’m not here to tell you that AI is not real or that the mega-cap tech trade is over. Three things can be true at once — the AI boom can be real, the trade can be extremely crowded and the financing mechanisms behind it can get uglier.
All of that can happen at the same time.
What I am going to challenge is the idea that the only way to win is by worshiping the theme and ignoring everything else. Because while everyone keeps piling into the same names at heroic valuations, there’s a whole category of businesses quietly getting paid from AI spending without the concentration risk or the insane expectations baked into the market darlings.
Here’s my framework: Stop worshiping the theme and start looking at business models.
Who actually has earnings leverage? Who benefits from AI capex without heroic valuations? Who can fund growth internally instead of issuing stock?
That last point matters more than people think. Buybacks reduce supply. Issuance increases supply. If enough mega-cap companies start selling shares to fund massive data center dreams, the market has to digest that supply.
Issuance is basically the market punching you in the face — congratulations, your portfolio was served for dinner. When that happens at scale, you’re paying what I call the market plumbing tax, the price you owe when the story is exciting but the mechanics stop being free. Liquidity drives markets, and nothing has correlated with market direction more than global liquidity for the last 100 years.
If you’re ignoring the plumbing — dilution, liquidity, passive flows — you’re ignoring the part of the system with a 98% correlation to returns.
And it doesn’t stop there. People forget how index inclusion works. It’s a demand engine. If a giant new IPO comes to market with a huge float, passive funds do not have infinite money.
Something gets sold to make room. So when everyone crowds into the same mega-caps, they’re assuming passive flows will always support them, even if index composition shifts. That’s not how the plumbing works. Sometimes enthusiasm outruns mechanics and that is exactly when investors need to be careful.
The Infrastructure Play Nobody Talks About
That’s why I keep coming back to what I call the uninvited guests at the AI cocktail party: Vistra (VST), Eaton (ETN) and Quanta Services (PWR).
These companies do not show up in glossy AI decks but they are the ones selling the cables, the transformers, the grid capacity and the construction muscle that actually keep AI alive.
They’re grid builders, data center construction specialists and electrification plays. They quietly sell everything the AI infrastructure needs to function, whether the hype cycle is rational or not.
These names don’t depend on perfect expectations. They don’t need fantasy multiples. They just need the hyperscalers to keep spending, because every model, every chip and every deployment burns electricity like a digital furnace. These infrastructure players do not have to win the AI story to win the AI business.
Then you have the direct winners — Nvidia (NVDA), Broadcom (AVGO), Taiwan Semiconductor (TSM), Micron (MU) and maybe Oracle (ORCL) — but you have to stay disciplined. Even the best companies become bad trades when expectations detach from reality.
NVDA gets 64% of its revenue from just three customers. That’s real concentration risk. And if rising rates or higher oil start squeezing budgets, companies with stretched valuations and heavy capex plans are the first to feel it.
Even sophisticated tools can fail in this environment. When liquidity changes or supply shocks hit, all those gamma exposure charts and options-pin expectations can break down. If we snap out of the expected ranges, all bets are off. That’s why even the pros have to stay humble when the plumbing shifts.
The Contrarian Hedges That Actually Make Sense
This is where the contrarian part comes in…
My hedges include energy names like Exxon Mobil (XOM), Chevron (CVX) and Schlumberger (SLB), plus defense names like Raytheon (RTX), Lockheed Martin (LMT) and Northrop Grumman (NOC).
These are not the sexy plays but they have something most AI darlings do not — pricing power, cash flow and business models that do not rely on fantasy multiples. Higher oil, geopolitical tension and elevated military spending may not be great for your grocery bill, but they can be very good for companies that are basically cash machines tied to real-world demand.
And there’s another example worth noting — Apple (AAPL). AAPL is not rushing into the AI data center arms race. It’s not throwing tens of billions at speculative infrastructure. It’s taking the smarter route…
Wait for the technology to sort itself out, then commit capital with precision. Sometimes patience is the cheapest risk-management tool in the world.
Of course, there are danger zones too. Leveraged semiconductor ETFs like Direxion Daily Semiconductor Bull 3X Shares (SOXL) are not long-term investments. They’re financial fireworks. Fun when they explode up, less fun when they explode in your hands.
Leverage cuts both ways.
The real key here is simple: Stop asking whether AI is real. It is real. The more important question is whether the market has priced in fantasy — every AI dollar generating magic, every mega IPO getting automatic passive buying, every tech giant building without worrying about dilution.
You do not need to hide under a bunker or dump everything into Treasurys. You just need to pick the companies that benefit from spending without relying on perfect expectations.
Jeffry Turnmire
Jeffry Turnmire Trading
I host my Morning Monster livestream at 9:15 a.m. ET each weekday on YouTube, and then 30 Minutes of Awesome at 5 p.m. ET each Tuesday!
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I’m just a regular dude in Knoxville, Tennessee: a husband, father, civil engineer, urban farmer, maker and trader.
I’ve been at this trading thing with real money for 20-plus years, and started paper trading over 35 years ago. I have a knack for making some epic predictions that just may very well come true. Why share them? Because I like helping other people — it’s the Eagle Scout in me.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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