Let’s take a cold, hard look at the semiconductor game. Right now, semiconductors are enjoying a fleeting moment of peace, blissfully exempt from the tariffs roiling the rest of the economy—floating free in a tariffic sea. This current state of affairs is crucial: as August 1 approaches, uncertainty looms like a shadow, ready to snatch that exemption away.
To chase the hottest stock on the street is to embrace a paradox: it works until it doesn’t. The valuation of Palantir now floats precariously, like an autumn leaf caught in an updraft, defying descent but bound inevitably to earth. For investors seeking new pastures, there are other blossoms amid this garden of artificial intelligence—stocks rooted more firmly in soil than clouds.
Indeed, one need only consider the venerable S&P 500—a benchmark index whose performance has, over the decades, proven itself an unwavering beacon of prosperity. Since its expansion in the year of our Lord 1957 to comprise five hundred distinguished companies, it has burgeoned with an astonishing vigour, increasing by nearly 14,000 percent. This prodigious expansion, corresponding to a compound annual growth rate of 7.5 percent—even before one takes into account the dividends that have sweetened the yields of the patient investor—is nothing short of remarkable.
Now, to clear the underbrush a little: An ETF is what happens when Wall Street tries to make investing as easy as falling off a log, bundling up a mess of stocks so you only have to buy the bundle and not get your hands dirty picking winners or, as often happens, high-flying turkeys. SCHD, in particular, fancies itself a steady old mule—no wild galloping, just even strides and hefty sacks of dividend dollars strapped to its back.
This path, however, demands an unflinching scrutiny of our acquisitions, for it is paramount that we align ourselves with fundamentally sound businesses confronting what may only be fleeting adversities.
The data center market is currently the most lucrative dungeon crawl in the tech industry, and AMD is attempting to loot the hoard while wearing a hat that says “I’m not really a dragon, honest”. Its MI300 GPUs are doing the equivalent of brandishing a rusty sword in a battle against a fire-breathing wyrm, but the quest is far from over. Investors, like wise wizards, must watch how AMD sharpens its blade in the coming months.
This alteration in apparent market dynamics demands, it is suggested, a degree of investor attentiveness. The following constitutes an attempt to delineate the reasons, though whether these reasons are causative or merely coincidental remains, as always, a matter of speculation carefully laundered through the apparatus of financial pronouncements.
Consider the grotesque machinery of the BDC, a creature birthed by Congress to devour its own entrails. By law, it must disgorge 90% of taxable income to shareholders, a ritualistic purge that transforms boardrooms into altars of sacrifice. Here, profit is not a goal but a feverish compulsion, a madness dressed in pinstripes.
Once a modestly valued enterprise, AppLovin traded at about ten times its sales only a few years ago; today, the market’s exuberance has elevated its multiple to over twenty. In this subtle shift, one discerns the gentle yet unmistakable nod of investor confidence—a quiet acknowledgment that the company’s innovative spirit is both recognized and rewarded. Yet, as any prudent value investor knows, such exuberance must be weighed against the immutable truths of fiscal discipline.
Yet here we are, staring at a price that’s perilously close to its all-time high. One might wonder if the market is merely holding its breath, waiting for a sigh of relief—or a full-blown panic. The tension is palpable, like a toddler clutching a balloon just before it floats away.