Last week, Reda made a defensive call: he dropped his half-position in SpaceX from the Finimize Portfolio. The reason wasn't anything specific to the rocket company — it was a growing unease about the broader AI trade, which has been showing signs of strain. Now, after two significant developments, he's reversing course and bringing the position back.
The original decision came as cracks began to appear at CoreWeave, a "neocloud" company that rents out computing power to AI businesses. For those unfamiliar, neoclouds are essentially specialized data centers built to handle the heavy processing demands of artificial intelligence. When a key player in that space starts to wobble, it can signal trouble for the whole AI ecosystem — and by extension, for companies like SpaceX that are increasingly tying their fortunes to AI.
SpaceX, despite its zero-gravity name, is becoming more and more focused on AI. The company uses machine learning for everything from rocket landing algorithms to satellite constellation management. So when Reda saw storm clouds gathering over the AI sector, he decided to step aside rather than ride out the turbulence.
So far, that move has looked prescient. AI stocks have continued to take a beating, and Reda admits he's still wary about the sector's near-term prospects. But two developments have shifted his thinking enough to warrant re-entry.
What changed?
While the brief doesn't specify the exact nature of the two developments, they're clearly significant enough to outweigh the lingering AI concerns. In the world of SpaceX, recent headlines have been dominated by two themes: its ambitious wireless ambitions and its complex relationship with Tesla. SpaceX reportedly seeking 80,000 US cell sites to build a fourth wireless carrier would be a massive expansion beyond its core rocket business. And SpaceX saying Musk must approve any Tesla tie-up highlights the governance questions swirling around the company.
These developments suggest SpaceX is not just an AI-dependent launch provider, but a diversified player with multiple growth engines. That diversification could make it less vulnerable to an AI downturn than pure-play AI stocks.
The AI trade's rough patch
The broader market has been grappling with AI-related jitters for weeks. AI funding worries rattle tech stocks have been a recurring theme, with investors questioning whether the massive capital spending on AI infrastructure will ever pay off. Tech stocks sliding as AI spending worries push Treasury yields below 5% shows how these concerns are rippling through fixed income markets as well.
For everyday investors, this is a reminder that even the hottest sectors can cool quickly. The AI trade has been a major driver of market gains over the past year, but it's also become crowded. When a key player like CoreWeave shows cracks, it can trigger a broader sell-off as investors question their assumptions.
What it means for investors
Reda's decision to bring back the half-position is a tactical move, not a full-throated endorsement of AI. He's still cautious about the sector's near-term prospects, but he sees enough value in SpaceX's specific situation to re-enter at half the size he might otherwise hold.
For ordinary investors, there are a few takeaways. First, it's okay to step aside when you're nervous — but it's also okay to come back when the picture changes. Second, diversification matters. SpaceX's move into wireless and its potential Tesla tie-up show that companies with multiple revenue streams can be more resilient than those with a single focus.
That said, the AI sector remains volatile. AI funding worries hitting Asian shares and lifting Treasuries shows that these concerns are global, not just domestic. And the ASX edging up as US tech slides suggests that markets are still trying to find their footing.
Reda's move is a reminder that investing is about managing risk, not just chasing returns. By keeping his position at half-size, he's limiting his exposure to the downside while still participating in any upside. It's a balanced approach that many investors could consider when they're uncertain about a sector's direction.
As always, past performance is no guarantee of future results. But for now, Reda is betting that SpaceX's two big developments are enough to outweigh the AI storm clouds — at least for a half-position.
