More Thoughts about Investing for AI

The AI trade is still a very good bet. Increased political uncertainty makes all investments today somewhat less promising than was the case when I wrote about this topic in July 2025. Regulation of AI is likely to increase over the next 2 years or so, constraining growth somewhat. But AI capabilities have been increasing faster than I expected. I don’t expect a full halt in AI capability advances, and existing capabilities are enough to fuel quite a bit of further growth in AI-related companies. So it’s unclear whether AI revenues will be higher or lower than what I expected in 2025. A pause is looking like it will cause less harm to AI stocks than the fairly serious estimates that I made a few months ago in Financial Costs of an AI Pause? , because pretraining is becoming less important to AI development. The biggest risk that I see to the AI trade is military action in Taiwan. I’m currently doing little about that risk. I’m guessing I’ll start buying puts that hedge the risk in a couple of months. Memory I sold nearly a third of my Micron position during the spring rally, and the remainder is still 40% of my net worth. I’ve also got around 7% of my net worth in SK Hynix, which is clearly the better buy now for those of us who can get permission to buy on the Korean exchange. The US ADRs have a significant premium to the Korean shares. I have a smaller position in Samsung. I probably should diversify more, but nothing stands out as a better deal than memory stocks, and I d…