The Compute Shortage Trade
Gustavo@gusgonzalezs
−12.4%
since Oct 2
The idea
I believe AI demand will keep outrunning compute supply for at least the next year, and the real money is in the squeezed layers around the chips, not just the chips themselves. So this basket leans heavy into power and grid equipment, optical networking and interconnect gear, and memory makers caught in a price squeeze, with chip giants held at a smaller anchor weight since that trade is already well known. I spread across many names rather than betting on one winner, and I keep a cash reserve on hand to add when the swings get sharp.
What it owns
- AI clusters are connected by optical links and switches that are in short supply across the industry. · BroadcomWhen standard AI chips are scarce, major cloud companies hire it to design custom chips and it also sells the networking chips tying clusters together., Arista NetworksIt supplies the switches that connect thousands of chips inside AI clusters, and demand tracks data center build-outs across major cloud providers., Coherent CorpIt makes the optical components that move data between racks at the speeds AI requires, and those parts are in short supply., Astera LabsIts connectivity chips sit between AI processors and everything around them, so every new cluster built needs more of its parts., Credo TechnologyIt makes high-speed cables and chips that link servers inside AI data centers, and more clusters built means more orders., Marvell TechnologyIt sells custom data center chips and optical silicon behind transceivers, touching both the custom-chip and network sides of the shortage.28%
- Data centers require electricity and transformers to run, and equipment makers have extended backlogs. · Vertiv HoldingsIt sells power distribution and cooling equipment inside AI data centers, where newest chips run hot enough to require liquid cooling., GE VernovaIts gas turbines and grid equipment have backlogs stretching years because data centers cannot get electricity quickly enough., Eaton CorporationIt makes the electrical equipment and power management gear that every new data center needs before chips can turn on., Constellation EnergyIt owns nuclear plants selling around-the-clock power to data center operators at premium prices under long-term contracts., Quanta ServicesIt builds the transmission lines and substations connecting data centers to power, and skilled labor itself becomes a bottleneck.28%
- Every AI chip needs stacks of high-bandwidth memory, and memory prices are climbing as supply tightens. · Micron TechnologyIt makes the high-bandwidth memory that sits next to every AI chip, and the bet is that HBM stays sold out as demand outpaces supply., Lam ResearchIt sells the machines that memory makers need to build more capacity, and a memory squeeze forces customers to spend on new tools., KLA CorporationIt sells inspection tools that help fabs squeeze more good chips from existing capacity when chips are scarce and yields matter most., SanDisk CorporationIt makes flash memory that data centers soak up for storage, and the bet is that NAND prices keep rising as supply tightens., Seagate TechnologyIt makes high-capacity drives where AI data gets stored, and those drives are pulled into the same shortage with stretching lead times.23%
- The chip makers sit at the center of the compute shortage, held at modest weight because the market already recognizes their importance. · Taiwan Semiconductor ManufacturingNearly every advanced AI chip gets made in its factories, so the compute shortage runs directly through its order book., NVIDIA CorporationIt sells the AI chip everyone is short of, and its revenue depends on orders continuing to exceed what it can ship.12%
- Cash9%