We Need To Honestly Talk About This Crash...

Summary

The presenter discusses a broad market selloff, particularly in AI-related stocks, and challenges a bearish Citrini Research argument that the AI infrastructure trade may be nearing a turning point. They acknowledge that market concerns are real but argue that the underlying growth story has not changed over the past few days. Their recommendation is to be patient rather than panic, though they have made small purchases in several large-cap technology stocks.

Market Conditions and the AI-Trade Debate

The selloff hit big tech, semiconductors, and “neocloud” companies particularly hard. The presenter compares it with earlier sharp pullbacks, but says it was less severe than the DeepSeek-driven selloff.

• Nebius fell nearly 40% in one day.
• Neocloud stocks were all down more than 50% from their 52-week highs.

The presenter summarizes Citrini Research’s bearish arguments as follows:

1. Growth in AI infrastructure capital expenditure has peaked.
2. Hyperscalers have spent nearly $1 trillion, while AI ecosystem revenue is around $200 billion, leaving a gap that may not close.
3. Order-book growth is slowing, technology companies are issuing debt and equity, and AI prices are falling.
4. Risk in AI infrastructure has shifted to the downside.
5. US data-center construction could face political and local-permitting constraints after the midterm elections.
6. The macroeconomic backdrop may be moving toward late-cycle stagflation.

The presenter’s counterarguments include:

• Slower capex growth rates do not necessarily mean falling capex dollars. Spending could rise from $1 trillion to $1.4 trillion—an additional $400 billion—without doubling.
• Major companies plan infrastructure spending well in advance, so the presenter doubts that plans have suddenly changed.
• The revenue-spending gap has been visible for some time. The presenter cites expected AWS growth of more than 40% over the next two years.
• Order-book growth may be slowing, but large companies still have more than $500 billion of work to deliver. The presenter argues that borrowing is manageable if returns on investment remain well above the cost of capital.
• Data-center permitting risks are not entirely new. Existing facilities and expansions should be less affected than new projects, and companies are also building outside the US.
• A weaker macroeconomic picture could change by 2027, while the current outlook remains uncertain.

The presenter questions the timing of Citrini Research’s claims, noting that the cited risks were already apparent before the recent stock declines. They also criticize the reported positioning of being short Nvidia and long Oracle, arguing that Oracle may be in a weaker position than Nvidia.

Data-Center and Company Updates

CoreWeave’s CEO said the company did not expect political changes to affect existing customer commitments or its order backlog.

• CoreWeave cited 1.5 gigawatts of active capacity worldwide and a plan for 4.2 gigawatts of contracted capacity by August 2026.
• The presenter says CoreWeave would need to reach roughly 80 gigawatts in the coming years. They argue that strong quarterly results and positive 2027 guidance are important for CoreWeave and other neoclouds.
• The presenter says AMD still expected growth of more than 80% next year, and Nvidia at least 70%, despite doubts about future spending.

Market Moves Mentioned

• AppLovin rose 29.8% after a strong report.
• AMD fell 12% despite strong results and guidance; Nvidia fell 6.7%.
• Sharply lower neocloud and related stocks included Applied Digital (down about 15%), Cipher, Nebius, IREN, WhiteFiber, Core Scientific, and CoreWeave (down 9.8%). Hut 8 fell 7%.
• Oscar Health rose 1.7% after results and guidance the presenter viewed positively.
• Sezzle rose 18.5% after reporting a good quarter and raising guidance. Shift4 fell nearly 14%.
• The presenter says the selloff extended beyond AI: cybersecurity, fintech, software, and other technology-related stocks also lacked support. They mention possible stress in credit funds but say it was unclear whether that was driving the move.

Company Results and Investment Cases

Mercado Libre (MELI)

Revenue grew 45%, marking its 30th consecutive quarter of growth above 30%.

The presenter says margins have been falling during an investment cycle, but believes the spending is producing operating improvements:

• Items sold per active buyer: up 22% year over year
• Unique buyers: up 22%
• Products per customer: up 12%
• Same-day or next-day shipments: up 49%
• Brazil order-processing costs: down 5% year over year and 14% since free shipping was introduced

In fintech, lending income grew more slowly than the loan portfolio. The presenter attributes this to a shift toward credit cards, upfront costs, and lower interest rates in Argentina.

Risks to monitor include operating-profit pressure, fulfillment costs after the holiday season, whether net interest margin stabilizes as cardholder cohorts mature, and spending in Argentina and labor costs in Brazil.

The presenter remains very optimistic and says Mercado Libre is the largest position in their retirement portfolio.

Fair Isaac (FICO)

The shares were down about 50% year to date, although the presenter says the business had a record year:

• Revenue: up 27%
• Scores-related growth: about 33% for the period and 41% for the full fiscal year; the captions render this figure ambiguously
• Software revenue: up 19%
• Non-GAAP EPS: up 43% for the period and 44% for the full year
• Non-GAAP net income: up 35%
• Free cash flow: more than $1 billion, up 40%

The presenter attributes the stock’s decline partly to a lack of clear 2027 guidance and less-transparent, lender-specific pricing. FICO said that publicly listing appraisal prices had made it a target in housing-affordability debates.

Software metrics included:

• Platform ARR: up 72%
• Platform net customer retention: 156%
• Trailing-12-month orders: $140 million, up 36%
• Software-segment margin: 30%

Shares outstanding declined 10% over the prior 12 months. The presenter considers FICO a possible bargain candidate and says they do not expect the business to disappear.

Shift4 (FOUR)

Third-quarter gross revenue excluding network fees was $648 million, up 10%. Guidance was weaker:

• Fourth-quarter growth: 3–5%
• Growth in 2027: mid-to-high single digits, below the previously discussed 9–13% organic growth range
• FY2026 EBITDA-margin guidance: reduced to 45–46%, from 46–47%

Global Blue was expected to deliver about $50 million of synergies by the end of 2026, versus a $70 million target. The company was also affected by the war in the Middle East.

Shift4 had repurchased shares equivalent to about 16% of its capital over the year and announced a new $1 billion buyback program starting in 2027.

The presenter says Shift4 is no longer clearly a rapid-growth story and raises the possibility of a “value trap,” while noting that growth could accelerate in mid-2027.

Presenter’s Actions and Cautions

The presenter says they bought small amounts of Meta, Alphabet/Google, and Nvidia, preferring large, established companies.

They were considering buying NetApp ahead of its earnings report but had not decided and were comfortable waiting. The presenter says investors do not need to invest available cash immediately; waiting for a market bottom or a few days of recovery is also reasonable.

Their main cautions are to be patient, avoid panic-selling, and not make decisions solely because a portfolio is sharply down. They suggest letting excessive leverage clear from the market before conditions potentially normalize.

The presenter says many companies’ business results remain strong, but acknowledges that the market’s reaction, sentiment, and the outlook for spending are difficult to explain.

Assets and Sectors Mentioned

Stocks: Exxon Mobil (XOM), Chevron (CVX), AppLovin (APP), Nebius (NBIS), AMD, Nvidia (NVDA), Oracle (ORCL), Meta Platforms (META), Alphabet/Google (GOOGL/GOOG), Microsoft (MSFT), Amazon (AMZN), NetApp (NTAP), Mercado Libre (MELI), Fair Isaac (FICO), Shift4 (FOUR), Uber (UBER), Oscar Health (OSCR), Sezzle (SEZL), Adyen, Chime, Applied Digital, Cipher Mining, IREN, WhiteFiber, Core Scientific (CORZ), CoreWeave (CRWV), and Hut 8 (HUT).

Sectors and themes: AI infrastructure, hyperscalers and cloud computing, semiconductors, neoclouds, data centers, cybersecurity, fintech, payment processing, e-commerce, consumer credit, and energy.

No specific bonds, commodities, or cryptocurrencies are discussed.

Disclosures

The presenter frames portfolio actions and opinions as personal views. No explicit “not financial advice” disclaimer appears in the subtitles, and the subtitles do not mention the video’s sponsorship.

Presenter and Sources

• Presenter: Couch Investor
• Sources discussed: Citrini Research’s newsletter and X post; a CoreWeave CEO LinkedIn post; Sundar Pichai’s podcast comments; statements attributed to Greg Abbott and Meta’s president; and company earnings reports, guidance, and management commentary.