Discuss the decline of U.S. stocks on Tuesday and the trading strategy

Over the past two years, the strongest logic in the AI industry chain has been simple: there's not enough computing power, not enough chips, not enough HBM, and not enough data centers.

So capital has been relentlessly flowing upstream to the hardware side. Companies like NVIDIA, TSMC, SK Hynix, and Micron have become the most direct and certain beneficiaries of the AI wave.

However, downstream cloud providers and application developers have not enjoyed the same valuation premium.

Microsoft, Google, Amazon, and Meta have been frantically investing in AI capital expenditures, building data centers, purchasing GPUs, and training models. Yet, the market has been more cautious towards them: you're spending all this money, but will you actually make it back in the future? When will the ROI on AI investments be realized?

This has created a very clear structural contradiction within the AI industry chain:

Upstream hardware companies have clear order books, fast revenue realization, leading to continuous valuation expansion;
Downstream platform companies have massive expenditures, long payback periods, so their stock prices are suppressed instead.

This is the so-called "valuation gap between AI hardware and AI applications."

As long as the market believes AI demand will continue to explode, this structure can be maintained. Because everyone thinks, no matter who ultimately makes the big money in the future, the companies selling the shovels will definitely make money first.

But if the market starts doubting whether cloud providers' capital expenditures can be sustained, or doubts that the pace of AI commercialization can't keep up with hardware investment, then the valuation of upstream hardware will be the first to be impacted.

The recent sharp drop in storage stocks like Micron and SanDisk is essentially a concentrated release of this kind of worry.

However, I don't believe this signals the end of the AI bull market.

Short-term stock price volatility and long-term industry trends are two different things.

A one-day plunge can only show that trading is too crowded, positions are too fragile, and expectations are too full. It cannot directly prove that AI demand has reversed.

What can truly change the long-term logic is not how much the stock price falls in a day, but the answers to a few key subsequent questions:

Will Micron's earnings guidance significantly weaken?
Will NVIDIA's orders show signs of softening?
Will Microsoft, Google, and Amazon cut AI capital expenditures?
Can the AI application side gradually prove its commercial returns?
Will cloud providers continue to be willing to invest real money in AI infrastructure?

As long as these issues don't show substantial deterioration, then this drop is more like a mid-term stress test, not the end of the long-term AI narrative.

I'm more inclined to interpret this drop as: a technical clearing after the AI hardware chain rose too fast.

So facing such a drop, the most important thing for ordinary investors is not to guess tomorrow's price movement, but to re-evaluate their own portfolio structure.

If your portfolio is full of Micron, SanDisk, optical communication stocks, and leveraged ETFs, then this drop will of course be painful. Because these assets are inherently high-elasticity, high-volatility, and highly cyclical—great fun on the way up, but brutal on the way down.

But if your core holdings are long-term assets like Nasdaq ETFs, Microsoft, Google, and NVIDIA, while keeping some cash and buying in layers according to plan, then this kind of drop is just part of the system.

What truly matters next is not the daily price movement, but watching Micron's earnings, NVIDIA's orders, Microsoft and Google's AI capital expenditures, and whether the AI application side can gradually deliver revenue and profits.

If the fundamentals aren't broken, then this drop is a stress test.
If the fundamentals start to break, that's the real trend inflection point.

Before evidence emerges, I won't change my strategy wildly because of a one-day plunge.

Continue holding core assets, continue keeping cash, and continue buying in layers according to plan.