Strong AI infrastructure demand does not automatically translate into sustainable earnings growth or attractive investment returns. Memory remains cyclical, and elevated prices could encourage capacity expansion, eventually weakening pricing power.
I would prioritise three indicators: hyperscaler capital expenditure, DRAM/NAND contract pricing and 2027 earnings revisions. If spending remains resilient and pricing holds firm, the sell-off may represent an opportunity. However, simultaneous deterioration across these indicators would suggest a more fundamental downturn.
My view: I would avoid aggressively buying the dip until earnings expectations stabilise. Strong current profitability is encouraging, but future margins and cash flows matter more than headline growth.
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