Influencer stocks change every year, but what doesn't change is human greed and fear.

Let's start with the core idea first: In every era, there are some meme stocks that double or even multiply several times. Most of them are forgotten by everyone after bowing out at the peak. We always find reasons to support the crazy rise, believing 'this time is different,' but the result is often the same.

Attached is an analysis of semiconductors and subsequent opportunities. I also 实名 (real-name) bullish on hyperscalers, especially Amazon.

The Rise and Fall of Meme Stocks

I have been in the market for over a year now, having experienced multiple rounds of 'blooming and fading,' witnessing the rise and fall of many meme stocks.

First, let's talk about those with absolutely no fundamental basis:

• OKLO: A PPT company doing nuclear power, with a peak market cap of 30 billion, now cut in half (knee-chop).
• OPEN: A real estate company，翻了 more than ten times in a short time, then continued to decline slowly.
• RGTI, IONQ, etc., quantum computing: Basically still just PPTs, yet they reached a market cap of 10-20 billion at their peak.

These stocks basically peaked when market liquidity topped out, and then as market liquidity tightened, they eventually returned to their intrinsic value. This kind of situation usually doesn't trap people because knowing the stock has no fundamentals, investors will decisively stop loss if they lose money.

What truly touched me were those with certain stories and logic, which rose rapidly in the short term, making people think 'this time is different' every time.

• CRWV, which quickly multiplied several times after listing, reaching over 180, then underwent a weekly-level correction and has remained stagnant since.
• HOOD, which rose all the way to over 150 last year, with a PE ratio peaking at over 50, then corrected continuously. COIN was similar.
• NFLX, whose PE ratio once expanded to over 40, from which it never recovered.
• PLTR, known as the most expensive company ever, hit new highs even after being heavily shorted, but regardless of how much earnings exceeded expectations, the stock price couldn't go up.
• MSTR, I won't say more, everyone knows what happened.

When everyone thinks 'this time is different,' shouting long-term bullish logic, and entering the market crazily, that's often when things start to change.

At the beginning of this year, it seemed like the faith in gold and silver was unshakable. But as the macroeconomic wind direction shifted suddenly, those investors who were firmly bullish on gold and silver have now become the loneliest sentries on the mountain top. Although the subsequent correction in gold was influenced by rising oil prices, heating inflation, and expectations of Fed rate hikes,meanwhile, the crazy rise of many tech stocks in April, May, and June shows that even without a US-Iran conflict, the decline in gold and silver would still exist. Especially silver, those who constantly claim silver supply shortages, after so long, the short squeeze hasn't happened yet.

Let's focus our attention back on semiconductors now. You'll find that the current market enthusiasm for semiconductors is identical to the enthusiasm for gold and silver at the beginning of the year. Meanwhile, the valuations of many semiconductor stocks have been raised to unprecedented levels, with the valuations of many companies already priced in through 2028. Just name a few, MRVL, LRCX, AMAT, ALAB. If you buy MRVL at 300 and ALAB at 400+, it implies that from now until 2028, the macro environment won't undergo major changes, and these enterprises can exceed expectations in delivering performance returns. Even storage, which is shouted to be perpetually scarce, has already priced in sufficiently optimistic expectations for the next two years.

History repeatedly proves that anything detached from fundamentals and rising parabolically must eventually undergo a long and painful adjustment process, finally returning to its proper value. All 'this time is different' narratives eventually evolve into 'this time is the same.' Because human greed and fear remain eternal.

Finally, let's see if BE, VRT, and LITE will meet the same fate? $Bloom Energy(BE.US) $Lumentum(LITE.US)

Semiconductors had a very violent rebound on Thursday, July 30th. I believe this will not change the expectation of a weekly-level adjustment in semiconductors. $VanEck Semiconductor ETF(SMH.US) $iShares Semiconductor ETF(SOXX.US)

Institutions have no reason to help retail investors trapped at the mountain top break even, and the absurd valuations of semiconductor companies cannot exist for long. Furthermore, the macro environment is changing, which I will discuss below.

Changes in the Macro Environment

Although I believe Walsh won't raise rates, the market currently believes the Fed will hike rates. The Fed didn't raise rates in July, creating a reasonable justification for the violent rebound, but market expectations for rate hikes haven't diminished. Currently (July 31st), the market believes there's a 50%+ probability of a Fed rate hike in September. The shadow of rate hikes remains. This is the biggest macro risk.

Another factor is that the yield on 30-year US Treasuries has reached a high not seen in nearly a decade, increasing the risk of debt defaults for many enterprises (such as highly leveraged firms like CRWV, ORCL). Many enterprises are essentially borrowing money to buy chips. If such an enterprise defaults, this chain breaks, and the entire tech stock sector will plummet. Although debt risks don't seem particularly high right now, if the Fed really raises rates even a little, triggering debt risks is not impossible. This belongs to the 'gray rhino' of the current macro environment.

Third, midterm elections. Historically, US stock market volatility is higher in midterm election years. Additionally, September is historically the worst-performing month for the S&P 500 index on average. The upcoming market conditions will definitely be difficult to trade.

Last but not least, the US stock market has actually been in a bull market for several years. Given this year and the next two years, it's unlikely the S&P 500 index will deliver double-digit returns consistently. In fact, it's quite possible that one of these three years will see declines.

Where is the Next Opportunity?

The market is always looking for new stories, and new flowers bloom every year. Post-pandemic, the Magnificent Seven dominated; under the AI narrative, semiconductors bloomed everywhere, while nuclear power and quantum computing were merely passing guests.

After thinking it over, I believe the next period's narrative support will come from large cloud vendors, including Microsoft, Amazon, Google, and a bit of Meta.

We can see that whether it's Amazon or Microsoft, the growth rate of their cloud businesses is increasing. In other words, the second derivative of their cloud business growth is positive, meaning the market can assign higher valuations to their cloud businesses, allowing for more premium.

At the same time, the capital expenditure growth rate of these big tech giants has basically peaked, indicating that the profit growth rate of semiconductor companies is about to decline; this means the second derivative of revenue for these semiconductor companies is negative.

Microsoft and Amazon haven't risen much in the past two years, while semiconductor company valuations have undergone significant expansion. This expansion was based on semiconductor companies maintaining relatively high growth rates. However, this growth rate is unsustainable. Referencing NVIDIA specifically, NVIDIA has entered a mature phase, with profit growth stabilizing, and the market only assigns it a valuation of around 20x. I believe that in next year and the year after, the growth rates of most semiconductor companies will decline. The market cannot continue to assign P/E ratios above 40x to most semiconductor companies. This is one of the reasons why I believe most semiconductor companies will experience a long weekly-level adjustment and fail to reach new highs.

Microsoft and Amazon's valuations are in very safe ranges, so institutional building of positions carries little risk. However, considering their excessively large market caps, their upside potential is also limited. Meta is about to expand into cloud services next. I think if the price drops to a reasonable level, it's still worth buying opportunistically. Google has the highest valuation among large cloud vendors, so I will keep my bottom position and not buy more.

Overall, I am still most bullish on Amazon. One reason is it has its own chips; another is that even during corrections, it has maintained staying above the 200-day moving average, indicating institutions' firm attitude towards holding Amazon. From a long-term perspective, I believe Amazon's stock price will definitely stand above 300 from now until this time next year. $Amazon(AMZN.US)

Alibaba in Hong Kong stocks is also worth watching. I believe Alibaba Cloud's growth rate this year will certainly be impressive. $Alibaba(BABA.US)