Overbuilding of AI center construction? Or just part of the AI-Supercycle story ?
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Hyperscalers delivering average revenue growth of 21% are trading at just 20.7x earnings. Meanwhile, Costco and Walmart command multiples around 40x earnings—with revenue growing at a fraction of that pace. The difference? Investors increasingly see AI capex as a burden, questioning whether today’s massive investments will generate tomorrow’s profits. That concern is understandable. But it also sets up a powerful opportunity. If AI spending delivers reasonable returns, today’s pessimism could look deeply misplaced. Investors may regret paying a premium for predictability while demanding a discount on some of the world’s strongest growth businesses. Source: Boring_Business Dr. Ahmad Majid Lootah
Below a snapshot of the biggest casualties Source: Bull Theory
The AI memory cycle is getting longer contracts. Capacity expansion remains cautious. According to Korean media: ▪ Samsung has signed long-term agreements with 10 major customers and is negotiating with 10 more. Its 2027 high-bandwidth memory (HBM) supply is reportedly sold out. ▪ SK Hynix has agreements with 14 customers covering more than half of its 2027–2028 capacity, backed by upfront deposits. But the construction strategy is just as revealing. Both companies are reportedly building factory shells early, while adding cleanrooms in phases as they monitor how US tech companies finance their AI spending. Memory has traditionally been a business of short pricing cycles and sharp swings in supply. Multiyear commitments and deposits provide greater visibility. They do not eliminate the risks of changing demand, pricing pressure or overcapacity. A different contract structure. Whether it produces a different cycle remains to be seen. $SSNLF $SKHY $MU $SNDK Source: Melvin @MelvinInvests

