Market Cycles
Understanding Market Cycles for Tech Investing
🔄 The Two-Speed Economy
Different sectors of the stock universe peak and bottom at different times. Understanding these cycles is key to maximizing alpha. The Market Cycles page tracks 6 primary cycles affecting the tech ecosystem, each with distinct drivers, durations, and phase detection logic.
📊 Cycle Status Overview
| Cycle | Name | Current Phase | Cycle Position | Duration |
|---|---|---|---|---|
| C1 | Semiconductor Inventory | PEAK | 2–4 Years | |
| C2 | AI Infrastructure CapEx | EXPANSION | 3–5 Years | |
| C3 | Consumer Product | ACCUMULATION | 12–36 Months | |
| C4 | Physical & Commodity | SHORTAGE | 5–10 Years | |
| C5 | Financial Conditions | NO DATA | — | Varies |
| C6 | Automotive & Mobility | MID CYCLE | 3–7 Years |
📅 Phase-Aware Investment Actions
Recommended positioning based on where we are in the cycle.
Phase 1 (Early 2026)
AI CapEx surge benefits chip designers and equipment makers first.
Phase 2 (Mid 2026)
As AI infrastructure matures, value shifts to application layer.
🎯 Cycle-Based Stock Recommendations
Stocks to consider based on current cycle phases. Derived from C1-C6 positions.
Cycles in recovery/expansion phase favor these positions.
Cycles in neutral or mixed phases.
Cycles in peak/contraction phase suggest reducing exposure.
🚀 AI Realization Index (J-Curve)
INFLECTION_CONFIRMEDTracking the "Phase 4" inflection: When AI User (T10) revenue growth overtakes AI Builder (AI-B) growth.
C1: Semiconductor Inventory
PEAKChips are the 'bullwhip' of the economy. Customers over-order during shortages and cut orders to zero during slowdowns.
SOXX < -15% YoY → Avoid
SOXX -15% to 0% YoY → Watch
SOXX 0% to 30% YoY → Buy
SOXX > 30% YoY → Trim
C2: AI Infrastructure CapEx
EXPANSIONCloud providers (Microsoft, Google, Amazon, Meta) spend in waves. Currently a 'Super Cycle' driven by AI/GPU transition.
CapEx Growth > 15% YoY → Overweight Hardware
CapEx Growth 5-15% → Rotate to Software
CapEx Growth < 5% YoY → Avoid Hardware
C3: Consumer Product
ACCUMULATIONDriven by smartphone/PC replacement cycles and strong holiday seasonality.
Q4 (Sept–Dec) → Sell Strength
Q1 (Jan–Feb) → Watch
Q2-Q3 → Accumulate
C4: Physical & Commodity
SHORTAGEIndustrial and commodity stocks operate on long lead times. Prices spike when demand outstrips fixed supply.
Price > 10% above MA200 → Buy Producers
Price near MA200 → Hold
Price < 10% below MA200 → Avoid
C5: Financial Conditions
High-duration assets (Biotech, Solar, Unprofitable Tech) act as 'Bond Proxies' and move inversely to rates.
10Y Below 50-Day MA → Buy Rate-Sensitive
10Y Above 50-Day MA → Sell High PE
C6: Automotive & Mobility
MID CYCLEAuto is a high-ticket, credit-dependent purchase that lags the general consumer cycle.
Auto YoY > 5% → Buy Auto Tech
Auto YoY flat → Hold
Auto YoY < -5% → Sell