Key Points:
- Updated a note from early-February 2025, which looked at sharp initial drops from highs in AI infrastructure stocks, and related to prior cases of quick/sharp drops from highs.
- The initial guess was that the drop would at a minimum cause a 3–4 month base in the stocks, in the successful cases. The longer lows take to establish, the less chance of successful cases.
- Prior periods 2023–2024 and 2021–2022 were very different in outcomes despite similar initial drops. Stocks bottomed more quickly and many more made it back to highs in 2023–2024.
- For the 2025 period, it bears some similarities to each:
- While the drop to ultimate lows was more like 2021–2022, the time it took was more like 2023–2024.
- By this point in 2023–2024, many in the group were back at highs. The current group is still well off highs in general, although building right sides of bases in most cases.
- On individual names, GEV looks like the first to have fully completed a base. CIEN looks more like the median stock in the group, still 21% off highs but on the upper–middle to right side of a base. MRVL is among the worst, with little recovery from lows, and mirrors many 2021–2022 cases.
