Trader degentrading: Semiconductor stocks plunge premarket; trapped supply may limit the rebound, remains bullish on Chinese tech stocks and the crypto market

In a pre-market analysis posted on November 5 by trader degentrading (@degentradingLSD), the author outlines their core views across various markets as follows:

On the semiconductor front, the author identifies a heavy concentration of trapped longs within the sector. Unless a painful liquidation triggers a V-shaped rebound, rallies will remain capped by sell orders hovering near breakeven levels. The sole alternative catalyst lies in corporate share buybacks; and prior to the expiration of the relevant CHIPS Act prohibition on December 9, only MU possesses the capacity to execute them. Citing Citrini, he notes that the "growth rate" of AI capital expenditure has peaked, though absolute capex will not halt—it will merely decelerate. Personally, the author argues that once growth expectations are priced at zero, any results beating those low bars will ignite fresh bullish momentum, revealing long opportunities. However, he admits the equity may not have truly bottomed at these levels and could still drift lower.

Regarding AI compute, the author points out that cloud giants rallied roughly 10% while semiconductors dipped around 10% on the previous day. The market mostly attributed this to anticipated delays in constructing new US data centers, which inadvertently elevates the value of existing chip stockpiles. H100 rental fees are up 26% year-over-year, GB200 up 50%, and ORCL disclosed 98% utilization for its AI infrastructure—all of which clash with the prevailing expectation of "compute devaluation."

For Chinese technology stocks, the author considers BABA's ~10% jump potentially to be a turning point. Should China enact further supportive policies, it could spark a powerful reversal, especially since Chinese tech valuations currently languish at historic lows.

In the crypto space, the author observes that resilient BTC action and ZEC defending its gains signal a return of tailwinds to the industry's founding ethos of "capital distancing itself from government." Given forecasts of even more crypto-adversarial administrations, regulatory headwinds could ironically fortify the decentralized crypto narrative, whereas explicit policy backing might actually dilute its core grassroots constituency.