AI Stocks Sell-Off Coming!

With the recent news that China is clamping down on exporting Raw materials that serve as the underpinning of AI Chips, the AI stock surge is OVER! Se Acabo! The Nasdaq, S&P and Dow that have been banking so hard on “AI darling” stocks are about to tumble real fast.

The rare earth materials that China is placing restrictions on are essential for the production of many computer chips, which are used in everything from smartphones to artificial intelligence systems.

The Rare Earth material restrictions placed by China are the most targeted action to limit supplies of rare-earth materials. This move is a follow-up from the April tariffs with China that were never rectified, and will result in China exercising long-arm jurisdiction over foreign companies to target the semiconductor industry.

The Export Controls China recently placed on Rare Earth materials may lead to week-long delays in shipments to companies like NVDA. The clearest risk all these “AI darling” companies face is an increase in the prices of rare earth-dependent magnets that are critical to the chip supply chain, 

Ask yourself, why do you think NVDA was so concerned a month ago with gaining access to the China markets? It’s not solely focused on the revenue generated from sales in China, but rather creating a stronger relationship in the government where the nucleus of their product is created.

This move will have a direct impact on the AI Darlings of late: NVDA, AMD, Apple, Oracle, etc….the prettiest girls in the Ballroom this past summer.

This is the thesis behind this post: The AI Boom is about to become the AI Burst!