To The Moon

$Invesco QQQ(QQQ)$ closed Friday down 3.47% at $690.49, raising an important question for investors: is this a temporary correction or the beginning of a more prolonged valuation reset?

My view is that both possibilities deserve consideration. I remain positive on the long-term technology outlook, but I think the market is entering a phase where earnings quality and actual returns on AI investment matter more than ambitious growth forecasts.

1. The market is asking a different question about AI

For much of the past year, companies announcing bigger AI infrastructure budgets were rewarded by investors. That enthusiasm is now being tested.

Building data centres, buying advanced chips and expanding computing capacity require enormous capital. Investors increasingly want evidence that these investments will generate sufficient revenue, operating profits and free cash flow.

This does not mean AI demand is disappearing. It means the market is becoming more selective about who benefits financially.

2. Not every technology company faces the same risk

I would distinguish between companies selling essential infrastructure and those spending heavily to build AI capacity.

Chipmakers, networking providers and data-centre equipment suppliers may benefit from continued infrastructure demand. However, their valuations can also become vulnerable if customers slow spending.

Meanwhile, companies with established businesses, strong balance sheets and recurring cash flow may offer greater resilience during a market correction.

3. Growth versus value could become an important theme

The widening performance gap between growth and value stocks is worth watching.

If investors continue reducing exposure to expensive mega-cap technology shares, some capital could rotate towards financials, industrials, healthcare and other sectors with more reasonable valuations.

I would not automatically abandon growth stocks, but diversification becomes increasingly important when market leadership is concentrated.

4. My strategy: Buy selectively, not aggressively

At $690, QQQ is worth monitoring for a potential long-term entry. However, I would avoid investing the entire amount at once.

I prefer staggered purchases, keeping some cash available in case the correction deepens. I would also compare QQQ with broader ETFs such as VTI or VT rather than assuming technology will immediately regain market leadership.

November through January has historically been a favourable period for equities, but seasonality is not a guarantee of recovery.

My conclusion

I don’t think the AI investment story is over. However, the easy-money phase, where almost every AI-related stock benefited from spending announcements, may be behind us.

The next stage could reward companies that demonstrate measurable returns rather than simply promise future growth.

For discussion purposes only.