AI infrastructure requires substantial upfront investment, while profitability depends on regulatory approvals, electricity supply and capacity utilisation. Delays could significantly erode returns, particularly for highly leveraged companies.
The divergence between Cloudflare and semiconductor stocks suggests investors are increasingly prioritising near-term monetisation over speculative growth projections.
Nevertheless, strong AI demand does not guarantee sustainable profits. I would focus on free cash flow, return on invested capital and earnings growth before considering this correction a buying opportunity. The long-term AI outlook remains promising, but valuations must be justified by actual financial performance.
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