Peter Boockvar: The AI Spending Bubble Is Cracking

Summary

Peter Boockvar argues that the AI bubble lies in capital spending, not the technology, and warns of downside in memory chip stocks and hyperscalers. He is bullish on consumer staples, gold, and the yen, while bearish on the dollar and long-term bonds. Global banks are rallying due to yield curve dynamics, but rising sovereign debt supplies threaten bond markets.

• AI capex spending by hyperscalers like Oracle and Meta is unsustainable and already being punished by markets.
• Memory and storage chipmakers (Micron, Western Digital, Seagate) face a cyclical downturn and Chinese competition that will crush margins.
• Consumer staples like Kraft Heinz and PepsiCo are deeply unloved, cheap, and offer attractive dividends with stabilizing businesses.
• Gold’s pullback on rising real rates is a buying opportunity; real rates will ease and the dollar rally will fade.
• The US dollar is a sell despite hawkish Fed repricing, and the yen is deeply undervalued, poised to strengthen as Japan repatriates capital.
• Japanese, European, and US banks are all rallying, driven by steep yield curves, ECB rate normalization, and capital markets strength respectively.
• Government debt and deficits are now driving long-term bond yields higher, signaling a structural shift in fixed-income markets.
• Investors should monitor Japanese repatriation risk, which could destabilize global bond and equity flows.