The 30 day correlation between the cloud giants like AMZN, MSFT, GOOGL, and META and semiconductor stocks like NVDA, AVGO, TSM, and MU just plunged from +0.78 to almost zero, the lowest level in four and a half years.
Part of the reason is that the four cloud giants are sitting on roughly $1.65 trillion in off balance sheet AI lease commitments. Bears are calling it “Enron 2.0,” but I think they’re completely missing the point. Enron was about fraud. This is real infrastructure. Unlike the “dark fiber” from the 90s that got built and then sat unused, inference demand today is basically eating up compute capacity as soon as it comes online.
The way I see it, once the market gets past all this fear around off balance sheet accounting, this disconnect could actually turn into a structural buy the dip opportunity. How are you guys playing this rotation right now?