AI Trade — Builders Sink, Users Rise

In one month the AI trade split three ways. The companies that build AI hardware lost 22.2% as a group. The companies that run AI workloads, the cloud operators, platforms and security software, lost 15.8%. The companies that put AI to work in their own business rose 7.9%. Monday showed the whole split in a single session, and it took one of our own lines with it.

The builders — Rubin closed below our line

On 28 October we wrote that a tradable bottom may be in place in the Rubin 100, our index of the companies that build AI hardware, and we named the close that would end the case: 1,703.80. On Monday the equal-weight index closed at 1,686.83. The case is off. Since the close of 28 October it has lost 8.1%, and it now stands 31.9% under its 22 June high of 2,478.59, though still 64.1% up this year.

Two of the three lines from that piece broke. High-Speed Interconnects closed at 1,785.29, 6.0% under its 1,898.81 line. HBM Memory, the AI memory makers, held: it closed at 2,551.74, still 7.6% above its line of 2,370.52. Only 35 of the 130 members trade above their 50-day average; the case needed that number back toward 65.

The month was hardest on the parts makers. Intel fell 49.7%, Aehr Test Systems 52.0% and Applied Optoelectronics 45.9%. The two industrial-gas suppliers in the index, Linde (+8.4%) and Air Liquide (+7.0%), rose, which is why the gases group is the one Rubin sector that finished the month flat.