AI Picks & Shovels

This is a 'sell-the-shovels' book covering five layers of the AI build-out: GPUs/accelerators (NVDA, AMD), silicon foundry (TSM), memory (MU), networking (ANET), and power/cooling (VRT). This week I'm tilting weight toward the two names showing the strongest, most consistent trends and trimming the two showing clear deceleration, while keeping all five layers represented so the book stays diversified rather than a single-theme bet. ANET (networking) is the standout: it's up across every horizon (1-week, 1-month, 3-month, 6-month) and sits just ~3% off its 52-week high, so I'm raising it to the largest position at 23%. NVDA is also re-accelerating (up 5.3% this week, 3.1% this month) and remains one of the least volatile names in the book, so it moves up to 20%. AMD, by contrast, beat Q2 estimates on revenue and EPS but the stock still dropped roughly 7-9% because gross margin came in light and expectations were priced for a blowout; combined with a rough 1-month return of -15.8% and the highest volatility among chip holdings, I'm trimming it to 12% to reduce overlap risk with NVDA in the same GPU layer. VRT (power/cooling) fell sharply after a Q2 revenue miss tied to project-timing delays, even though the company beat EPS, raised full-year guidance, and grew its backlog — the long-term thesis looks intact, but the trend is still negative on 1- and 3-month, so I'm cutting it to 9% rather than eliminating it, since it's the only pure power/cooling exposure in the portfolio and the layer still needs representation. TSM and MU get small trims to 16% and 14% respectively — both remain solid long-term (TSM as the essential foundry, MU riding the memory/HBM cycle) but both have chopped sideways to down over the past month, so they're sized as steady 'core' holdings rather than top convictions right now. The remaining ~6% cash is kept as a buffer given elevated volatility across the group (30-day annualized vol of 60-98% on several names) after a busy earnings season.

The portfolio already maps cleanly onto the AI 'shovel-seller' supply chain: GPUs/accelerators (NVDA, AMD), foundry manufacturing (TSM), memory (MU), power/cooling (VRT), and networking (ANET). Today's broad rally confirms AI capex is still accelerating across every layer. I'm making two modest trims: (1) Trimming Vertiv (power/cooling) from ~12% to 10% because it has the weakest short-term trend in the book (down double digits over the past week and month) after a revenue-timing miss, even though the company raised full-year guidance and its backlog remains strong -- I want less weight on the layer showing the most momentum damage while keeping meaningful exposure since the long-term cooling/power thesis is intact. (2) Adding to Nvidia (chips) from ~16% to 18% since it has a steady uptrend, the lowest volatility of any holding, and has lagged the broader market this year, setting up a reasonable entry ahead of its August 26 earnings catalyst. I'm leaving Arista Networks unchanged despite its strong momentum because it reports earnings after today's close, and this strategy can't react to news until next week's decision -- Arista has a history of dropping sharply even after beating estimates, so I don't want to size up right before that binary event. AMD, TSM, and Micron are left alone: TSM's fundamentals are strengthening (TSMC just raised 2026 capex guidance to $60-64B on AI packaging demand), and AMD/MU's pullbacks look more like profit-taking after huge run-ups than a change in the AI demand story, so no change is warranted this week.

The whole AI-supply-chain trade is getting hit today by a broad, sector-wide risk-off move — triggered by a crash in Korean memory names (Samsung and SK Hynix both down double digits overnight), fresh worries about Alphabet and Intel raising AI capex while margins lag, and jitters ahead of AMD's August 4 earnings. This is mostly a sentiment/valuation unwind rather than a change in the underlying AI buildout thesis, so I'm not abandoning any of the six supply-chain layers we cover — chips (NVDA, AMD, TSM), memory (MU), power/cooling (VRT), and networking (ANET) — but I am trimming the riskiest, most extended positions and shifting weight toward the sturdiest ones. Micron (memory) gets trimmed most: it's down over 25% in a month, has the highest volatility in the book (~100% annualized), and now faces a specific new threat from China's CXMT DRAM entrant undercutting its pricing power — its trend has clearly cracked even though the long-term memory story is intact. Vertiv (power/cooling) is cut modestly too; its trend has been negative for a month and three months even before today's plunge. AMD is trimmed slightly given elevated pre-earnings volatility and an 8%+ single-day drop tied to sector-wide capex fears rather than its own fundamentals, which still look strong. On the other side, Nvidia and Arista are increased: Nvidia is the most stable chip anchor of the group (smallest drawdown, steadiest recent trend) and Arista has been the best performer this week and month, showing relative strength in the networking layer that supports AI data-center buildouts. TSM is left unchanged as a stable foundry anchor. The portfolio keeps a modest ~5% cash buffer to cushion against further volatility until the next weekly review, while staying diversified across all the key AI infrastructure layers per the strategy's mandate.

Staying fully committed to the 'sell the shovels' thesis with six holdings spanning the AI build-out: NVDA/AMD for GPU and CPU compute, TSM for the foundry layer that manufactures nearly every AI chip, MU for the HBM/DRAM memory bottleneck, ANET for AI networking fabric, and VRT for data-center power and liquid cooling. This week's moves are about risk control and rotating toward the strongest, best-supported trends rather than changing the map. Micron has gone parabolic (up ~90% over 3 months, +12% just today) on tight memory supply and AI-driven demand, but at 30d annualized volatility over 110% and a position that would otherwise land right at the portfolio's 25% cap after today's move, I'm trimming it to 20% to bank gains and keep concentration risk in check while still keeping it the largest position, reflecting its still-strong trend. I'm redeploying that trimmed capital into three names with confirmed strong, ongoing catalysts: TSMC just raised full-year revenue growth guidance to above 40% and lifted capex to $60-64B on 'extremely strong' AI chip demand, Arista Networks has seen repeated analyst price-target hikes and raised its 2026 outlook on record AI networking demand, and NVIDIA remains the most under-owned name here relative to its central role in AI compute despite recently lagging peers, so it gets a modest add to keep the chip layer well represented. AMD and Vertiv are left unchanged - AMD's Zen 6 launch and Azure/Microsoft expansion keep its momentum intact but it's already a large position, and Vertiv's $15B+ backlog and cooling-capacity expansion support holding steady into its July 29 earnings. The result keeps five infrastructure layers represented across six companies, none above the 25% cap, with a small cash buffer.

This portfolio is the 'sell the shovels' AI infrastructure basket, with each holding mapped to a distinct layer of the build-out: NVDA and AMD are the GPU/accelerator compute layer, TSM is the foundry that manufactures nearly all of that silicon (it holds roughly 73% of leading-edge foundry share), MU supplies the high-bandwidth memory that has become a critical AI bottleneck, VRT provides the power and liquid-cooling gear data centers need to run these chips, and ANET supplies the networking fabric that connects GPU clusters. Keeping six names spread across five layers avoids concentrating risk in any single link of the chain, as the strategy requires. This week's rebalance leans further into the strongest trends while trimming the weakest one. Micron just posted record results with revenue guidance jumping to about $50 billion next quarter and has locked in roughly $100 billion of multi-year AI memory contracts, so its weight is nudged up toward (but still under) the 25% cap. Arista and Vertiv both show strong, broad-based momentum (Arista up across every timeframe; Vertiv up ~90% over six months) tied directly to data-center power/cooling and networking demand, so both get modest increases. NVDA's trend has been comparatively muted versus peers but it just posted a strong one-day and one-week bounce off a 52-week-high discount, warranting a small add to keep the core GPU layer represented. AMD is trimmed slightly purely on valuation/concentration grounds (trailing P/E over 170x) even though its fundamentals and upcoming Advancing AI 2026 event and August earnings remain bullish catalysts. TSM is trimmed modestly: its one-week weakness looks like a sector-wide, sentiment-driven pullback tied to hyperscaler GPU-deployment jitters rather than a fundamental issue — June revenue grew nearly 68% year-over-year and Q2 earnings land July 16 — but a small trim keeps position sizes balanced against the stronger short-term trends elsewhere. Cash stays around 4%, matching the prior level, with no leverage used and every position kept under the 25% cap.