There's a growing consensus that we're in a bubble now in semiconductors.
When does the bubble burst? I'll try to take a stab at that here.
Lots of people have lost their reputation, jobs and personal finances trying to time bubble tops.
In this I am going to use the Nasdaq 100 during the Tech Bubble and the SOX Semiconductor index for today. You can appropriately criticize that choice.
Measures suggest that the market isn't healthy, nor stable. The role of markets are to allocate capital, price risk and establish value. None of those things are happening in a health manner at the moment.
Why? Current hyperscalers have very large and mature businesses that are hard to separate from the rapidly growing ones. The semiconductor index is where the highest degree of index-level speculation is occurring.
I'll look at aggregate Return, Risk, Issuance, Funding and Policy. We have met most of the "necessary" conditions for a top. However, both Funding and Policy have the potential to prolong it.
PRICE MOVES
In my study of bubbles, I find that they operate similarly to @geoffreyamoore "Crossing the Chasm". This book is nominally about how products achieve dominance. However: bubbles are largely narrative-driven and I find the same principles apply.
• The Early Adopters see the trend before everyone else. Patience is required.
• The Early Majority catches a huge part of the run up. The money comes easy and fast.
• The Late Majority catches sizable gains, but with much higher risk.
During the Nasdaq Bubble
Anchor date: 1995, when "cyberspace" became popularized.
• First run = 200% over 3.5 years (37% pa)
• Second run = 100% over 1 year (100% pa)
• Third run = 100% over 5 months (428% pa)
Semiconductors Today
Anchor date: much harder but I'm interpolating between the Transformer (2017), GPT-2 (2019 when scaling laws began to show promise) and ChatGPT (late 2022)
• First run = 230% over 6 years (22% pa)
• Second run = 130% over 1 year (100% pa)
• Third run = 100% over 3 months (1500% pa)
You can argue with the base effects for the "First run" (understandably), but the recent runs I believe are much harder to dispute.
@MilkRoadMacro@novogratz Presure is scheduled:
1) First unlock window,Around Aug. 2026, 20%-30%
2) Rolling staged unlock, Day 70 → Day 135 ,35%
3) Second major unlock, Around November 2026,28%.
4) Final 180-day full unlock
But OAI is more vulnerable than spacex。