Semiconductor names are down a lot, but not oversold, says tech investor Dan Niles

Summary

Dan Niles discusses Chinese AI model competition shaking U.S. markets and the semiconductor selloff. He argues AI frontier models will become commoditized, favoring infrastructure over model companies. While semiconductor names are down significantly, near-term headwinds from top spenders cutting AI costs persist, but Niles is starting to wade into infrastructure stocks.

• Chinese AI models like DeepSeek and Moonshot are competing with U.S. frontier models, closing the gap despite chip restrictions.
• Niles believes necessity drives Chinese innovation and they will continue to challenge U.S. AI leadership.
• He outlines three vectors: top companies cutting AI bills, surging token production, and falling cost per token from new models.
• He expects all frontier AI models to eventually commoditize, making AI infrastructure the preferred investment over model companies.
• Near-term, the top 1% of companies slashing AI spend could create a speed bump for AI infrastructure demand.
• Semiconductor stocks are down a lot but not yet oversold; Niles is beginning to cautiously buy infrastructure names.