Brandon Nelson, who has managed the Calamos Timpani Small Cap Growth Fund (CTSIX) since 2011, continues to bet on AI infrastructure companies despite a recent market pullback. His fund has returned 52 percent over the last 12 months and outperformed 99 percent of small-cap growth peers over the past three years, according to Morningstar data.
The iShares Semiconductor ETF (SOXX) gained 72 percent through most of this year, reflecting strong demand for AI-related hardware. The ETF has since dropped 16 percent from its June 22 high as investors grew concerned that hyperscale cloud providers might cut capital expenditure on AI infrastructure.
Nelson views the selloff as a price momentum pullback, not a structural decline. "The fundamental momentum of most of those AI infrastructure names is still very strong," he said, adding that the companies he holds have not yet shown signs of an earnings slowdown.
Nelson's strategy centers on identifying growing firms that consistently exceed earnings expectations, driving valuation expansion through multiple expansion. His sell signal is triggered by "fundamental momentum fatigue"—weaker-than-expected earnings beats or shrinking profit margins.
One AI infrastructure name Nelson favors is Sterling Infrastructure (STRL), which specializes in preparing sites for data center construction, providing groundwork services before physical buildouts can begin.
His track record supports the discipline. The median return over the 12 months following his decision to sell a stock has been negative 12 percent relative to the Russell 2000 Growth Index, suggesting his exit timing has been effective.
The conviction extends beyond Nelson. Bertrand Cliquet, a portfolio manager at Lazard, argues that infrastructure companies hold intrinsic value that exceeds the speculative AI hype sometimes attached to them.
Stephen Byrd, Morgan Stanley's global head of thematic and sustainability research, said the pullback across AI infrastructure stocks presents an "unusually attractive buying opportunity," given his bullish outlook on AI capabilities and associated capital expenditure.
Jim Cramer has also expressed a bullish view on major chipmakers including Nvidia and Intel, arguing their prior gains reflected genuine demand, not supply shortages.
Selling pressure has been driven by investor concern over hyperscaler spending discipline. Large cloud providers have committed substantial capital to AI infrastructure, and investors are pressing for evidence that those outlays will generate measurable returns.
Nelson said he has seen no fundamental fatigue in his AI capital expenditure holdings. He is tracking earnings strength and profit margins as the primary indicators of continued growth, and is disregarding short-term price moves. The Russell 2000 Index currently trades at 3,017, down 0.6 percent on the day.
