Long Short in AI: Focus on Margin Winners, Not Just Market Share

Many people have question about how to do long short in AI in the case that AI is peaking out? Do we stick with long AI short non-AI, or long market share winner over market share loser?

My short answer : Long margin winner, short margin loser in AI.

In this AI cycle, many downstream companies use extra external funding to win AI businesses at below-average margin. And the competition and margin pressure could exacerbate when AI peaks out.

Hence instead of long market share winner who sacrifice margin, it is important to understand each companies' business model and priority even in same subsector - whether profitability, or scale, or technology leadership.

Have a good weekend.