The recent AI stock meltdown had nothing to do with fundamentals. It was margin-driven selling forced by specific events: South Korean investors facing massive margin calls, and a high-leverage hedge fund (Situational Awareness LP) liquidating all positions due to margin pressure.
More than 3% of South Korean adults received margin calls in July with commonplace 500% margin loans getting wiped out. Then it came out that Leopold Aschenbrenner’s hedge fund had to sell off its entire portfolio due to margin pressure. His market-beating returns came down to picking the right AI stocks and using massive leverage. When the margin calls came, he had to liquidate.
That should actually be relief for AI stock investors. The problem wasn’t business fundamentals deteriorating. The problem was forced selling from leveraged investors. In fact, fundamentals are getting better. As the margin unwind calms down, three stocks stand out as worth watching.
Alphabet: The Cloud Platform Powering AI
Alphabet operates the software backbone of the AI boom through its cloud platform. The platform helps companies run applications, create AI agents, and enhance online security. This business segment is seeing heightened demand.
The numbers are impressive. Cloud revenue surged 82% year-over-year. That helped drive overall company revenue growth of 24% year-over-year in Q2, with Google and YouTube continuing to gain market share.
Beyond cloud, Alphabet has multiple AI segments in early growth stages. The Gemini App reached 950 million monthly active users. Waymo is continuing to deploy autonomous vehicles across various US cities. Grand View Research projects an annualized 20.2% compound annual growth rate for the autonomous vehicle market through 2033. Alphabet has a significant lead in that race.
The recent selloff has created an opportunity to own a company with multiple AI growth drivers at a reasonable valuation. The fundamentals are intact and accelerating, not deteriorating.
Micron: Memory Chips at a Bargain Valuation
Micron established itself as the leading provider of memory chips, much like Nvidia did with GPUs. Just as critical to AI infrastructure, memory has been in short supply as data center buildout accelerates.
The recent dip has pushed Micron to a forward price-to-earnings ratio of 5.6, which is one of the lowest valuations in the tech sector. That’s remarkable for a company with accelerating revenue.
Micron’s revenue has more than quadrupled year-over-year. The company guided for more than 20% sequential growth in Q4 of fiscal 2026. That kind of growth at a 5.6x forward P/E is exceptionally rare.
What makes Micron particularly interesting is that it has secured multi-year customer agreements. This gives the company clear revenue visibility and minimizes the risk of a cyclical memory chip bust. Long-term contracts with hyperscalers mean predictable revenue growth for years ahead.
The fear of Micron’s cyclical business nature has rattled some investors, but long-term deals combined with a 5.6x forward P/E make the stock look like a genuine bargain. The fundamentals aren’t the issue—leverage liquidations created the selling pressure.
Nebius: The Neocloud Infrastructure Play
Nebius was hit harder than the other two stocks because it represented more than 40% of Aschenbrenner’s hedge fund portfolio before margin calls forced liquidation. That created forced selling pressure that has nothing to do with business fundamentals.
Nebius operates in the neocloud space, offering essential compute infrastructure for hyperscalers with AI ambitions. The company secured a five-year $27 billion deal with Meta Platforms, which speaks to the quality of Nebius’ business and its strategic importance.
The revenue growth is remarkable. Sales reached $399 million in Q1, representing a 684% year-over-year improvement. The company’s revenue is built on annual recurring revenue (ARR), which provides clear visibility into future growth.
But that $399M in quarterly revenue is just the beginning. Nebius told investors it’s on track for up to $3.4 billion in revenue this year. The company expects to close out the year with $7-9 billion in annual recurring revenue.
The company also aims for more than 4 gigawatts of contracted power by year-end, up from the 3 gigawatts it previously guided for in February. That increase reflects growing demand for compute infrastructure from AI companies.
Nebius is being forced to prove its model works by delivering on these ambitious targets. The margin unwind created an opportunity to own a company with exceptional revenue growth and multi-year contract visibility at a discount.
Forced Selling Creates Opportunity
The common thread here is that all three stocks were sold due to margin pressure, not because fundamentals deteriorated. Forced liquidations don’t discriminate—good companies get sold alongside bad ones.
Alphabet has multiple AI growth drivers accelerating. Micron has secured long-term contracts at a bargain valuation. Nebius is delivering exceptional revenue growth backed by massive customer commitments.
All three look more interesting now than they did before the margin unwind, precisely because the selling was driven by leverage, not business deterioration.
As the margin unwind calms down and forced selling pressure eases, these three stocks should benefit from a normalization of valuations. The fundamentals never broke. The leverage did.
Which of these AI fundamentals interests you most? Let us know.
Three AI Stocks After the Margin Unwind
| Factor | Alphabet | Micron Technology | Nebius |
|---|---|---|---|
| Business Model | Cloud platform + AI services | Memory chip supplier | Neocloud infrastructure |
| Recent Growth | Cloud +82% YoY | Revenue +400% YoY | Revenue +684% YoY |
| Key Growth Driver | Cloud AI adoption; Gemini; Waymo | Memory demand from data centers | ARR growth; multi-year contracts |
| Major Contract | N/A | Multi-year customer agreements | Meta $27B five-year deal |
| Forward P/E | Reasonable | 5.6x (exceptional discount) | Growth pricing |
| Revenue Visibility | Strong (cloud recurring) | High (long-term contracts) | Highest (ARR-based) |
| Margin Unwind Impact | Moderate selling | Moderate selling | Severe (40% of hedge fund portfolio) |
| 2026 Guidance | 24%+ growth | 20%+ sequential Q4 growth | $3.4B revenue; $7-9B ARR target |
| Long-Term Catalyst | Autonomous vehicles (20% CAGR through 2033) | Data center memory demand | Gigawatt expansion (4+ GW target) |
| Market Cap | $4.4T | $930B | $48B |
| Key Risk | Competition in cloud | Memory cycle risk (mitigated by contracts) | Execution on aggressive growth targets |
