Name: This Is When The Market Rally Ends And Stocks To Beat Downturn | Jay Singh
Uploaded: 2026-08-17T17:04:24+00:00
Duration: 3060 s

Speakers

Jay Singh — Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs

Summary

Jay Singh discusses the current market environment, highlighting a short-term Goldilocks scenario before pre-election volatility. He details his investments in gold miners, merger arbitrage, and software, while warning about the massive CapEx spending by hyperscalers in the AI race. Finally, he outlines major themes for the second half of the year, including power infrastructure and defense.

The market is experiencing a short-term rally supported by peaking 10-year yields and cooling inflation.
Caution is advised heading into the November elections due to potential geopolitical escalations and tariffs.
Gold miners and physical precious metals are attractive as real interest rates peak.
Hyperscalers are burning massive cash on AI CapEx, shifting from capital-light to capital-heavy business models.
The AI infrastructure race is driving sustained demand for high bandwidth memory, liquid cooling, and power grids.
Software stocks offered contrarian value after being heavily shorted as hedges against long AI positions.
Future investment themes include power infrastructure for data centers and a global defense super cycle.

Ideas

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 4:01

Gold miners benefit from peaking real rates.

The gold miner space is attractive as real rates have temporarily peaked. Specific names like AGI are set to ramp production, while others like Barrick and Agnico Eagle are also strong holdings alongside physical gold and silver.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 4:36

High-quality mortgage originator offers sustainable dividend yield.

Redwood was bought during an index rebalancing sell-off driven by interest rate fears. It is a well-run business doing high-quality mortgage origination and securitization for high-FICO individuals, offering a sustainable 15% dividend yield.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 5:31

WBD merger arb offers a 19% spread.

The Warner Brothers spread is one of the big merger arb spreads in the market, offering a 19% cash deal spread that is expected to go through antitrust and close next year.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 5:52

NSC UNP merger arb offers 12.5% spread.

Long the NSC UNP spread, which offers a 12.5% spread on the merger arb side.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 6:05

AI cloud providers see massive revenue growth.

Bought Nebius and CoreWeave as GPU lease rates went up during the AI sell-off. Both companies crushed earnings, with Nebius showing massive revenue growth, positive operating cash flow, and strong customer prepayments for future capacity.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 7:28

Heavily shorted software names offer contrarian upside.

Software names were heavily shorted by hedge funds as a hedge against long AI stocks, leading to systematic selling. Bought names like DataDog, Wix, ServiceNow, and Snowflake as contrarian bets with strong moats.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 9:42

Memory stocks offer value after recent sell-offs.

Memory names were trading at very low multiples (e.g., four times earnings) during the July sell-off, presenting a good short-term trading opportunity.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 10:16

Expect a short-term rally before pre-election caution.

The market is in a short-term Goldilocks environment with a temporary peak in the 10-year yield, supporting a rally for a few weeks. However, caution is warranted going into the November midterm elections due to potential re-escalation in Iran and new tariffs.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 18:38

Hyperscalers face risks from massive AI CapEx.

While still liking Google, Microsoft, and Amazon, investors must be careful as these are no longer capital-light businesses. They are burning cash flow on massive AI CapEx, which the market is beginning to penalize.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 21:25

AI compute race drives infrastructure demand.

The AI race is creating a mad dash for compute, leading to continued high demand for high bandwidth memory (HBM), energy/grid connections, liquid cooling, advanced GPUs, custom silicon, and Broadcom products, despite the eventual symmetric risk of overbuilding.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 33:29

Power infrastructure benefits from data center demand.

Benefiting from the AI and data center trends, Babcock and Wilcox preferred shares basically doubled and the stock was up 40%.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 39:36

Long-term rates are expected to stabilize.

Bought TLT as long-term rates are expected to stay flat or go down a little bit, with no big 10-year spike expected unless there is a massive escalation in the war.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 41:34

Uber is cheap and generates massive cash.

Uber is very cheap, trading at 12 times forward earnings after a 30% drawdown. It is expected to generate $10 billion in free cash flow this year and grow to $15 billion by 2028, making it a strong long-term buy despite autonomous driving risks.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 42:40

AppLovin has significant upside despite near-term choppiness.

AppLovin is a wonderful company that still has about 50% upside and could easily reach $500 over the next two years, despite near-term choppiness and concerns about revenue deceleration.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 43:25

Shopify shows strong performance with blowout earnings.

Added to Shopify, which has had blowout earnings over the last couple of quarters and finally rallied after its most recent good earnings report.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 43:53

Sold Atlassian due to software sector volatility.

Sold Atlassian to take gains after a volatile period, as there is a lack of confidence to own software in the same size as before due to the choppiness and AI-related shorting pressure.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 47:13

AI data centers drive sustained power demand.

The AI pivot from chip hype to power and ROI highlights the energy and grid bottleneck. Power companies like VST, battery infrastructure, and co-location companies will see sustained demand because data centers need power every year.

Jay Singh Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs 48:13

Geopolitics drive defense and sovereign supply chains.

A defense super cycle and geopolitical realignment will drive global defense spending. Governments will subsidize domestic production in critical sectors like rare earths, energy storage, and semiconductors to build sovereign supply chains.

This Is When The Market Rally Ends And Stocks To Beat Downturn | Jay Singh

Summary

Ideas

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