Power & Memory Could Be the Best AI Trades Into 2027

LGD Set (0:00)

There is one giant question hanging over this AI market. Are we building too much? The story is constantly that everyone is sold out of compute memory and energy, and that we can't build this stuff fast enough. But does that mean we're going to end up with too much supply in the end? After all, that's happened to other industries in the past. But surely, it can't happen here, right? What's up, everybody? It's LGD Set here, and welcome to Milk Road Stocks, the daily stock show that is here to question every possible take out there, including my own. Today is September 9th, 2026, recording way back on the 3rd. Every week, we sit down with Vincent, our leading AI researcher, as we dive deep into the economics of this bottleneck era. And this week, he's out here to challenge public perceptions, where many headlines are claiming that this buildout is not needed, and that we'll have more than enough compute with what we got right now. Those people are wrong, says Vincent, and the fundamentals are really starting to show it. We're going to talk robotics, Nvidia projections, and even frontier model revenue, as he crafts his thesis for the music to keep playing. This is usually the part of the show where I'll tell you, you can check out Vincent's full portfolio for just a dollar in Milk Road PRO at the link below. But instead, I'm going to tell you to like, subscribe, and drop a comment with your own hot take on this topic. Otherwise, enjoy the show. All right, Vincent, listen, there's a question on everybody's mind, and it's, are we overbuilding AI capacity? We've talked about this many times on the roll-up, like is there too much? By the time we get to building data centers on the moon or whatever, are we even going to need it?

It seems so excessive, but I feel like you're going to help answer that question today.

Vincent (1:29)

Yeah, if you go to X to social media, you really get the sense that this AI infiltrate is that. I actually think it's quite the opposite. I think we're in a consolidation phase, but the underlying data points of the last couple of weeks are really, really promising. And I want to run you guys through that today and show you where I think the attractive opportunities are.

LGD Set (1:49)

Perfect, let's get into it.

Vincent (1:51)

Yeah, so let's start where we are and what kind of the fear is, right? So we're building a lot of capacity, right? We're investing all those like the hyperscaler cutbacks and we're spending billions, even trillions of dollars into that buildout. And just added some screenshots here on the right that were from the last two weeks. I found like 15 or even 20 reports that had in their title, we're overbuilding AI fears, bubble is going to burst, all that kind of, to my view, nonsense, but it's fueling the fear in the market, right? And you can really sense that investors are scared that we're building data centers that we don't need in a couple of years' times, and there is no ROI on the invest, right? This is basically where we are today. And then if you look at the charts, you can also see that.

And I found this one pretty compelling because the price to earnings ratio of the semiconductor trade is at its lowest since 2022 It's below the price earnings ratio of the S&P 500

While the earnings, the earnings per share grew massively, right? If you look at, for instance, at Nvidia, it grew between 30 to 40 percent a year since 2022 So there is such a massive disconnect in what the fear of the investors are versus how the actual earnings of the company looks like, right? But hey, we are in that situation. And I think people need to understand that to also reckon why we're consolidating here at the moment.

LGD Set (3:45)

I just have a comment on those headlines you posted. Is that anything like that? I always think about how there's those headlines from 30 years ago saying the internet is just a passing fad. You know, like one of those one of those things versus like there will always be naysayers and people willing to pull it down. And you guys have mentioned this a lot, too, on the show that public sentiment is not good, right? There is a very negative public sentiment.

And it's for the same reasons that there's bullish sentiment as well, right? That it's like, well, it's a lot of the same big billionaire names talking about the stuff, the big companies, people are mad that a lot of wealth is consolidated to the top. But inevitably, I think that forms a huge bias for people. They can't really look at this stuff objectively, right? And there are most people, those people writing those headlines are not looking at any of these numbers, just looking at what they see in other headlines. I'll let you continue.