Dan Chung 3.6 9 ideas

"The shortage in memory is not going to be resolved in 26 and maybe not even in 27... We own a lot of Western Digital. We like it a lot." The AI build-out requires massive amounts of raw infrastructure (cooling, equipment, memory). Since the supply shortage for memory is structural and multi-year, pricing power and demand for companies like Western Digital and Micron will remain elevated longer than the market expects. LONG. Specific conviction on WDC and the broader memory/infrastructure theme. Unexpected rapid increase in memory supply or a sudden halt in hyperscaler CapEx.

"They're increasing CapEx at about 100% rate... If that CapEx in my view, starts to slow because it's rationalizing around 2028, how soon does the market start to price in the huge free cash flow that will revert back to shareholders?" The market is currently punishing these companies for high spending (fear). However, this spending is necessary to build the AI "rails." Once the infrastructure phase concludes, capital intensity will drop, leading to a massive explosion in Free Cash Flow that the market is currently underpricing. LONG (Patient accumulation). AI monetization fails to materialize, forcing CapEx to continue without return on investment.

"That's probably the one sector in tech where I think there's more caution is warranted... the cost to create software is falling... old business models for software could be challenged." AI allows new entrants to write code and create software products at near-zero cost. This commoditizes the product, threatening the pricing power and "moats" of legacy SaaS companies that rely on seat-based pricing or high development barriers. AVOID / CAUTION. Expect underperformance relative to hardware. Legacy software companies successfully integrate AI to increase margins rather than getting displaced.

"Places to look for opportunity might be outside of tech... Health Care... looks to be a big beneficiary of AI itself... in clinical research, in management of health care delivery, in pricing insurance better." Investors are solely focused on Tech for AI exposure. Healthcare has underperformed for years due to policy uncertainty, making valuations attractive. AI will drive efficiency in non-drug areas (insurance/admin), providing growth without the economic sensitivity of other sectors. LONG. A value/growth rotation play utilizing AI as a catalyst. Regulatory changes or government price controls on healthcare services.