2000 Telecom CapEx: Telecoms spent massively on fiber optic infrastructure in 1998-2000. When revenue growth didn't materialize fast enough, CapEx was cut overnight. Companies like Nortel, Lucent, and JDS Uniphase lost 90%+ of their value. The supply chain (Corning, Ciena) collapsed alongside them.
2018 Crypto Mining: GPU demand for cryptocurrency mining drove NVIDIA's revenue to record highs. When crypto prices crashed, GPU demand evaporated in a single quarter. NVIDIA's stock dropped 55%.
The AI CapEx cycle shares structural similarities: massive spending driven by future revenue expectations, supply chains ramping capacity based on extrapolated demand, and a dependency on continued spending growth to sustain valuations.
Unlike telecom fiber (which was built on speculative demand), AI infrastructure spending is driven by measurable inference demand. Every ChatGPT query, every Copilot suggestion, every AI-generated image requires compute. Inference revenue is growing and measurable — it's not speculative in the way 2000 fiber capacity was.
The counter-counter: just because demand is real doesn't mean it justifies $200B+ annual CapEx. The question is whether AI revenue growth at hyperscalers exceeds the infrastructure spend. If AI services generate $50B but cost $200B in CapEx, the math doesn't work indefinitely.
Sentinel Tickers are the early warning system. ASML's order book decelerating signals CapEx pullback 6-9 months before it hits. Advantest's test equipment orders reflect whether new chip architectures are entering volume production. Micron's HBM pricing reveals whether demand is real or inventory-driven.
The Weekly Signal composite score captures CapEx-related risk through the Macro and Participation dimensions. A regime shift from Green to Yellow often correlates with early signs of CapEx deceleration.
The CapEx Cliff question is not 'will it happen' but 'when.' Closelook's approach: stay long while Sentinel Tickers confirm, but have a pre-defined exit plan triggered by two-of-three Sentinel weakening. The worst outcome is being late to recognize the peak.
Sentinel Tickers — Early Warning →Weekly Signal — Current Regime →Market Regime Scoring →