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Kyle just sold Apple at the top (for a second time) to buy two AI names - hereโs whyโฆ
First, a quick detour.
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KYLE SOLD APPLE AT THE TOP TO BUY THE AI FIRE SALE ๐
Last Thursday was a rough day to own anything with "AI" stamped on it.
Memory stocks, chipmakers and neoclouds were all getting dumped, while Apple sat near all-time highs.
Our PRO analyst Kyle Reidhead saw that split and went shopping. Within about 15 minutes, he made three trades:
- Sold all of his Apple at $345, up 30% (less than 1% below its record high).
- Opened a brand-new Nebius position at $164.59, less than 1% above the day's low.
- Bought more SpaceX at $141.36, also within 1% of the day's low.
Pretty good timing! But the reasons behind the trades start with why AI stocks were on sale in the first place.
The trouble started with CoreWeave, the biggest neocloud.
Its bonds sold off until they were yielding close to 16% (the yearly return lenders demand to hold its debt, which rises when they worry about getting paid back).
Throw in a hot inflation report to stoke fears of higher interest rates, and investors started treating every neocloud as the same risky bet. CoreWeave fell ~15% on Wednesday, and Nebius dropped 10% right alongside it.
Kyle thinks the market lumped together companies with very different balance sheets. ๐
Nebius has ~$8B in cash against $8.55B of debt, while CoreWeave has $5.5B against $35.6B.
SpaceX sits on about $100B in cash, which is why Kyle expects it to be the biggest buyer of compute if things fall apart.
In Kyle's view, higher rates make financing compute harder, but nowhere near impossible... so the companies that manage their money well should keep growing, and may scoop up struggling rivals at a discount.
Gartner even expects more than 80% of neocloud providers to stop operating independently by 2030 (bad news for the sector, but a shopping list for the survivors).
Underneath all of this sits a bigger bet. Kyle thinks demand for compute is "much much higher than the market realizes," and it'll stay scarce for years, which keeps pricing power with whoever owns it.
He wants to own the companies that turn energy into intelligence, and he's bought SpaceX four times since August on the back of this. His model values it at $221/share in his base case and $389 in his bull case by the end of 2027.
Back in September, he said he wanted to buy more under $140, and on Thursday he finally got close.
To pay for it all, Kyle sold Apple.
He called it a great "safe haven" for his portfolio.
But at 34x forward earnings (its share price divided by the profit analysts expect over the next 12 months), and green on a day the rest of the market was nuking, Kyle said it "just doesn't make sense to hold this asset right now."
Rising memory costs don't help either, with recent reports saying Apple cut iPhone 18 Pro component orders by 15-20% as memory chips got pricier.
This is also the second time Kyle has sold Apple near a high. He trimmed a third of his position at $341 in July, and the stock fell ~11% over the next two weeks.
None of this means Kyle thinks the selloff is done, and Friday showed why.
Nebius gave back its Thursday bounce with another 12% drop to $165.47. Kyle had called his first buy a starter position, so he added more at $164.29 ("More is better").
He listed the risks himself (higher rates, inflation and questions around Anthropic's finances), and admitted "maybe we go lower, maybe we don't."
The next real test comes this Thursday (Oct 22), when Nebius reports earnings and shows how it plans to pay for all that growth.
(Mark your calendars.)
Btw, Kyle's last three exits each took around three months:
- Salesforce, sold up 59%.
- ServiceNow, sold up 37%.
- ARKG (an ARK biotech fund), sold up 30%.
You can follow all of his trades in real time inside Milk Road PRO. Try Milk Road PRO for a buck for 7 days here!
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