← Hedgeye hub  ·  Research hub  ·  Research library

Software vs. Semis: the next battle in AI

A two-man "Free-Form Friday": the S&P 2% off its high while breadth, small caps, consumer and junk credit break down; a one-factor market keyed to oil, with physical crude near $120 against a ~$105 Brent future; momentum rotating from long-wave semis to short-wave software; the AI-safety push read as PR and regulatory capture; and the consumer AI app everyone has been waiting for.
2026-SEP-19 · Protect the Pile #26 (Hedgeye Asset Management) · Patrick Kent ("RPK") & Sam Rahman · 57:53 (recorded Sep 18) · ▶ Watch · transcript · actionable insights
One-line take: the index hides a deteriorating tape — only 30–35% of stocks above their 50-day, the Russell 2000 and high yield on bearish Hedgeye signals, consumer names "a bloodbath," CCC spreads at 920bp (~14% borrowing cost), and a hawkish Fed hike lifting the dollar. RPK calls it a "one-factor model market": oil. Physical crude (~$120) has to converge with futures (~$105), and diesel ($6.50, $10 in California) is heading from inflationary to demand-destroying, which argues the market's 2027 hikes are "fake pencil." Inside tech, momentum is rotating: software leads 3-month momentum from extinction-level positioning while semis still top 12-month lists. RPK expects "haves and have-nots" in both: memory is past peak pricing as China adds DRAM/NAND capacity; Intel, Snowflake and Twilio look better; "Adobe still sucks." The AI-lab safety campaign is read as PR and regulatory capture. Sam finds Meta's Muse the first genuinely useful consumer AI app; RPK says Apple is missing a courtside-subscription killer app for Vision Pro. Views are the panel's; each row names the speaker.

1. Stocks & names mentioned

Panel show-source: the View is the net stance, and the speaker is named in each row. Index and commodity rows use the hub's existing proxy ids (SPY for the S&P, IWM for the Russell 2000, HYG for junk credit, Oil). Memory is discussed as a sector (China expanding DRAM/NAND capacity, past peak pricing), not a named company, so it has no row. JT Taylor, Keith McCullough (ETF Pro) and Bernstein are people or firms cited, not rows.

TickerNameResearchViewWhat they saidAt
Crude oilCrude oil (the molecule)PositiveRPK: physical ~$120 vs the ~$105 Brent contract rolling within a week — "they have to end up being kind of the same price," which "puts a sort of bullish cushion under the oil markets." Sam: the WTI trend signal sits down in the mid-90s, so even relief-driven dips can stay signal-bullish; diesel is tight everywhere and a hurricane or another refinery outage would tighten it further. The market is "a one-factor model market."08:25
INTCIntelQT · SA · STK · FAPositiveRPK: "certainly looking better," and "probably the number one best company for building out a US manufacturing footprint in semiconductors… they have a fab already created that they need to fill up" — a semi "have" as the group splits into haves and have-nots.25:46
SNOWSnowflakeQT · SA · STK · FAPositiveRPK: a software "have" — "not only [not] hurt" by AI, "actually probably in really good competitive positions," the kind of name that migrates back into the momentum basket and stays there.26:11
TWLOTwilioQT · SA · STK · FAPositiveRPK: "the narrative [has] totally changed and actually the valuation's not that crazy" — a software have that can hold a place in short-wave momentum.26:39
METAMeta PlatformsQT · SA · STK · FANeutralSam: Muse is "the first real look at a consumer application that has the potential to be super useful, high utility, really, really easy to use," and Meta is very good at putting products in front of consumers. Both hesitate over handing Meta access to everything. A product view, not a stock call; RPK notes Threads ramped fast, then faded to "a distant number two."39:10
AAPLAppleQT · SA · STK · FANeutralRPK: Vision Pro with an NBA courtside package at ~$2,000/yr "would sell millions" — add Live Nation concerts, IMAX at home, NHL on the glass; "Steve Jobs never would have missed it." Missing it means Apple "either can't or [is] just missing this." Sam adds the hardware still needs work. Also the profit-pool analogy: Android has most units, Apple most of the margin.45:23
SPYSPDR S&P 500 ETF Trust (US stocks)QT · SA · STKNeutralRPK: ~7,620, "a little over 2% off the all-time high," the Hedgeye signal "bullish for now," but "breadth has deteriorated under the covers" (30–35% of names above the 50-day). Both flag light positioning and cash on the sidelines as the potential positive catalyst if headlines get "less bad."00:55
XOMExxon MobilQT · SA · STK · FANeutralCited as evidence, not a stance — RPK: "Exxon just brought a diesel refinery down" because refiners are running flat out and skipping turnarounds, "and when you don't maintain a refinery, it blows up."12:34
JPMJPMorgan ChaseQT · SA · STK · FANeutralPassing mention — its commodities team "throwing up their hands" with no oil forecast; RPK calls that "the right answer" in a multivariate system, so watch the signals instead.09:32
OpenAIOpenAI (private)NeutralRPK: the labs' AI-safety campaign is "a PR onslaught": a salvation narrative ("regulate us… create a monopoly of just a few of us"), cover for build-out limits they can't grow past, and a response to growing liabilities (that morning's story of Anthropic staff hacking OpenAI's emails). Sam: "regulatory capture," coordinated with METR, the NYT and politicians within three days. Referenced as industry context, not a position.28:28
AnthropicAnthropic (private)NeutralSam: Dario "saw the risk-factor section of his [IPO filing] and literally lost his" composure; METR is "affiliated with Anthropic and effective altruism." RPK: the labs are chasing a "Mag 1" platform play that may give way to fragmentation. Referenced only — no position.33:09
AMZNAmazon.comQT · SA · STK · FANeutralNamed only as one of the well-capitalized buyers that will "gobble up" permits, supply and contractor capacity from spec data-center builders (RPK: "do you have a permit? All right, we'll just take that project off your hands"); Sam also raises investment committees comparing Amazon/Google credit with sovereign credit.55:30
BXBlackstoneQT · SA · STK · FANeutralNamed only in Sam's list of real-capital players ("Amazon, Blackstone, Brookfield, KKR") that get preferential contracts and supply over "mom-and-pop cowboy developers."56:18
BNBrookfield CorporationQT · SA · STK · FANeutralNamed only in the same list of data-center capacity buyers.56:18
KKRKKR & Co.QT · SA · STK · FANeutralNamed only in the same list of data-center capacity buyers.56:18
LYVLive Nation EntertainmentQT · SA · STK · FANeutralPassing mention — RPK's hypothetical Vision Pro content partner ("a concert package with Live Nation… front-row seats at concerts").45:53
IMAXIMAX CorporationQT · SA · STK · FANeutralPassing mention — "IMAX films at home, partner with IMAX," another hypothetical Vision Pro subscription.47:18
IWMiShares Russell 2000 ETF (small caps)QT · SA · STKNegativeRPK: the "bearish Russell 2000" signal diverging from the S&P's bullish-for-now signal is where the breadth damage shows. (IWM is the proxy; they speak of the index.)01:22
HYGiShares iBoxx $ High Yield Corporate Bond ETF (junk bonds)QT · SA · STKNegativeRPK: "High yield is now bearish trend"; BB spreads ~273bp (+20bp in a month), CCC at 920bp — "a 14% cost to borrow on the crappiest companies, and those crappy companies are what your PE credit looks like." (HYG is the proxy.)02:32
ADBEAdobeQT · SA · STK · FANegativeRPK, bluntly: "Adobe still sucks" — a software have-not even as the rest of the group recovers into short-wave momentum.26:11

2. Talking points

00:55 The index vs the tape

02:09 Energy and credit stress

04:15 Churn, narrowing, and a consumer bloodbath

05:48 Light positioning is the hidden positive

08:25 Physical vs paper oil must converge

12:12 A tight refining system

13:53 From inflationary to disinflationary oil

17:22 Momentum is a basket, not a sector

22:59 Can software and semis work together?

28:28 The AI-safety push: PR and regulatory capture

33:55 "Not an AI skeptic, an AI claim skeptic"

39:10 Muse: the first real consumer AI app?

45:01 Vision Pro's missing killer app

49:17 Deficits, and corporate vs sovereign credit

53:35 Spec data-center builders become buyers' supply

3. In plain English

Oil — Crude oil Positive

There are two oil prices: what a real barrel costs for delivery now (about $120, they say) and what futures contracts trade for (about $105 for Brent). Before a futures contract expires, the two have to meet. RPK expects them to meet somewhere in between, which puts a floor under the futures price. Hedgeye's trend signal for US crude stays bullish down to the mid-$90s, so even a relief dip wouldn't change the trend.

The bigger picture: as diesel hits $6.50 (and $10 in places), high prices start to destroy demand, which would slow the economy and eventually cool inflation. That is why they doubt the Fed will keep hiking in 2027.

INTC — Intel Positive

RPK expects chip stocks to split into winners and losers rather than move together. Memory chips are a commodity, and China is adding a lot of capacity, so he thinks their best pricing has passed. Intel is on the other side: it already owns US factories it needs to fill, which makes it the natural company for a push to build chips in America. He notes its chart is improving.

SNOW / TWLO — Snowflake, Twilio Positive

Earlier this year investors dumped software stocks on fears that AI would replace them. RPK says the market is now sorting survivors from victims: data platform Snowflake looks strongly placed, and Twilio's story has improved while its valuation stays reasonable. Adobe, in his view, is still on the losing side. Because software has become one of the market's recent leaders ("short-term momentum") while few investors own it, these winners could keep attracting money.

HYG — Junk bonds Negative

Junk bonds are loans to riskier companies. Hedgeye's trend signal on them has turned bearish, and the extra yield on the weakest (CCC-rated) borrowers is about 9.2 percentage points above Treasuries, which works out to roughly a 14% borrowing cost. RPK points out those are the kinds of companies private-equity firms own, so stress there is a warning for the wider credit market.


Built from the public YouTube episode (auto-transcript saved in the transcript; fillers removed) — wording is Patrick Kent's and Sam Rahman's own. For personal study — not investment advice. © Hedgeye for source material.