AI Stocks Are Falling: Where Hedge Fund Manager Thomas Hayes Is Investing Next

AI stocks have dominated the market, but hedge fund manager Thomas Hayes believes the biggest opportunities are shifting elsewhere.

Speaking with David Lin, Hayes explains why semiconductor stocks could face further declines while undervalued companies, small-cap stocks, and defensive sectors begin to recover.

Why Hayes Is Moving Away From Semiconductor Stocks

Hayes argues that the semiconductor industry follows a familiar cycle:

• Chip shortages push prices and profits higher.

• Manufacturers increase production.

• Competition increases supply.

• Prices and profit margins eventually decline.

He believes Chinese, Korean, and Japanese competitors could put pressure on companies such as Micron.

His conclusion: AI will continue growing, but today's biggest chip winners may not remain the biggest winners.

Where Thomas Hayes Is Investing

Rather than chasing semiconductor stocks, Hayes is focusing on companies he believes are undervalued or positioned to benefit from AI adoption.

Some of the investments discussed include:

Company	Hayes' investment thesis
Comstock Resources	Natural gas demand from AI data centers
Alibaba	AI investments, cloud computing, and a potential Chinese economic recovery
Crown Castle	Cell tower infrastructure and dividend income
GXO Logistics	AI and robotics improving warehouse efficiency
QXO	Building materials and Brad Jacobs' acquisition strategy

These are Hayes' investment ideas, not guaranteed winners.

Why Small-Cap Stocks Could Recover

Hayes believes many smaller companies have been overlooked while investors concentrated on a handful of major technology stocks.

He argues that small businesses could benefit from:

• Stabilizing or falling interest rates.

• Lower valuations.

• AI-driven productivity improvements.

• Investors moving away from crowded technology trades.

Hayes expects opportunities in small-cap and value stocks over the next 6–12 months, although the timing remains uncertain.

Why Investors Are Buying Bonds and Defensive Stocks

With the 10-year Treasury yield around 5.2% in the interview, bonds have become more attractive to some investors.

Hayes also highlights growing interest in:

• Utilities

• Consumer staples

• Healthcare

• Real estate investment trusts (REITs)

He believes these previously unpopular sectors could benefit as investors seek income and move away from expensive technology stocks.

The Business Lesson

The biggest opportunity isn't always where everyone is investing.

Hayes believes the next stage of AI growth could reward companies using the technology to reduce costs and increase productivity, rather than only those building the infrastructure.

For entrepreneurs, the lesson is to focus on practical AI applications that improve profit margins.

Watch the original interview: https://www.youtube.com/watch?v=edXu0Aff7QU

Disclaimer: This article summarizes Thomas Hayes' investment opinions from the interview. Stock picks and forecasts are speculative and are not financial advice.