AI Infrastructure Is Up 500%. Here's Why We're Short the Rally.

The AI infrastructure cycle is running at full mania. In this episode we break down the biggest signals from May 2025, make the case for why we are short the rally, and explain exactly where the durable opportunity sits when the cycle turns.

Intel is up 500% in 12 months with revenue roughly flat and a valuation at levels not seen since the dot-com peak. We run the valuation math on the short thesis and explain why the incremental buyer is not thinking about price-to-sales. The 3x leveraged semiconductor ETF is now the fastest-growing ETF in history. These are not signals that typically mark the beginning of a move.

We go into the hidden economics of AI demand. Cursor is running a 25 to 30% negative gross margin. Anthropic is running 10 to 20% negative gross margins. The demand is real, but it is subsidized by venture capital and by pricing structures that will have to change. We break down what happens to trillion-dollar valuations when the subsidies slow and these companies meet public markets where investors can actually bet against them.

We cover the deflationary thesis. Gartner projects a 90% reduction in LLM inference costs by 2030. Every prior technology has followed the same curve. The companies that survive the deflation are not the ones selling model access. They are the ones with proprietary data, distribution, and the operating leverage to demonstrate it in revenue per employee.

We end with the 20-year bet. The largest companies in the world today did not build the internet. They used it. Google, Amazon, Meta. Not AT&T and Cisco. The same pattern is playing out with AI. The generational returns will come from the application layer, not from timing a cyclical infrastructure build-out.