Infra Play #153: Q3'26 Infra Play portfolio
Welcome to the "bear market"
Things are moving so quickly in the AI trade that they put the good old days of crypto booms and busts to shame. Q2 fit an entire market cycle into thirteen weeks. After an aggressive recovery following the Iran war dump, we saw three of the largest listings in financial history, and then a proper bear market to close things out. Roughly $3.3 trillion in global semiconductor value has evaporated since June 22. It was the worst week for chips since the tariff meltdown of April 2025.
The latest trigger was the launch of Kimi K3. Moonshot unveiled the model at the World AI Conference in Shanghai: 2.8 trillion parameters, open weights, and occasionally trading blows with Fable on certain benchmarks. The market read it as DeepSeek 2.0 and sold everything that had doubled, which in semiconductors meant almost every stock.
In practice, what we are seeing is deleveraging, profit taking, and some liquidity reshuffling. SpaceX raised over $75 billion at a $1.77 trillion valuation, Cerebras raised $5.55 billion, and the SK hynix ADR raised $26.5 billion. That is more than $100 billion of liquidity absorbed in eight weeks, in a market where most large players had already hit their targets for the year. Blaming the latest dump on Kimi K3 makes little sense when in most use cases the model is more expensive to run than GPT-5.6, before we even touch giving your codebase to a Chinese vendor that offers no privacy, lacks the compute to service the demand, and is likely running aggressive distillation from Anthropic models.
More importantly, the market turning red has nothing to do with the actual fundamentals. Micron is still rationing HBM. Tower is still collecting prepayments. Broadcom signed a $30 billion deal with Apple in the middle of the selloff. Demand remains sky-high, and so do the profits in semiconductors.
Let’s review how things went for each company in Q2 and evaluate the new portfolio composition as we position for a recovery from the “bear market.”