Paradigm shifts vs bubbles: AI chips and bitcoin show powerful trends can still produce severe corrections

AI Infrastructure Boom and Memory-Chip Valuations

The AI infrastructure boom propelled memory-chip companies to extraordinary valuations before sharp pullbacks. Hyperscalers such as Amazon (AMZ) and Google (GOOG) are spending heavily on data centres containing thousands of AI accelerators. These systems require enormous quantities of high-bandwidth memory for processing and NAND flash for storage, tightening supply and lifting chip prices.

Micron Technology (MU) produces DRAM, NAND and other memory products, while Sandisk (SNDK) specialises in NAND flash and solid-state storage. Micron rose roughly 700% year over year, and Sandisk gained more than 4,000%. Both have subsequently retreated from their peaks, illustrating how quickly enthusiasm can reverse.

The excitement created the largest U.S. IPO of all-time in SpaceX (SPCX), while SK Hynix (00060), a leading supplier of high-bandwidth memory, raised $26.5 billion through the largest-ever U.S. listing by a foreign company. Its ADRs initially surged, but subsequent volatility exposed the risks of buying into peak optimism with SK Hynix down 15% during Asia market hours.

Precious Metals and the Debasement Trade

Precious metals followed a similar pattern. Gold and silver accelerated on the “debasement trade”, the belief that government borrowing, money creation and inflation will erode fiat currencies. Silver rose more than $120 in January 2026 before retreating as much as 50%, while gold experienced a milder reversal.

Bitcoin and Strategy’s “Infinite Money Glitch”

The largest corporate holder of bitcoin, Strategy (MSTR), had their own paradigm shift with the “infinite money glitch” also weakened. The company issued shares above the value of its bitcoin holdings and used the proceeds to buy more bitcoin. Strategy has since fallen roughly 80% from its peak, that premium contracted to around net asset value.

The Core Lesson

The lesson is that structural trends can be real while their valuations remain cyclical.

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Digital Assets in Q2 2026

Digital assets posted a third consecutive quarter of losses in Q2 2026, the longest losing streak since the 2022 bear market, as institutional capital rotated into AI equities and Bitcoin ETFs recorded their largest quarterly outflow since launch. Our report examines what drove the divergence, where structural adoption continued regardless, and what Q3 signals to watch.

Why it matters: Digital assets posted a third consecutive quarter of losses in Q2 2026, the longest losing streak since the 2022 bear market, as institutional capital rotated into AI equities and Bitcoin ETFs recorded their largest quarterly outflow since launch. Our report examines what drove the divergence, where structural adoption continued regardless, and what Q3 signals to watch.