Every year, the market teaches you a new vocabulary word.
You don’t ask for it. You don’t go looking for it. It just sort of appears one day.
And suddenly everybody’s pretending they’ve understood it forever.
That’s one of my favorite parts about markets.
You wake up one morning, and grown adults are casually throwing around words like “tokenization,” “quantum computing,” and “meme stock.”
They’re at dinner parties acting like they have PhDs in whatever the hell they’re talking about.
This year, I learned two new words, “neocloud” and “photonics.”
If you’d told me five years ago that I’d be sitting around talking about photonics over steaks and red wine in Nashville while people argued about GPU clusters and optical interconnects, I probably would’ve laughed in your face.
And yet here we are.
The market always finds a way to drag you into the future whether you’re ready or not.
WTF Is a Neocloud?
The first time I heard somebody say “neocloud,” I thought it was a rejected villain from “The Matrix.”
Apparently not.
Turns out “neocloud” refers to this new wave of AI infrastructure companies, many of which were originally crypto miners.
And that makes perfect sense once you think about it.
These guys already had giant warehouses full of machines, massive cooling systems, cheap electricity contracts, and experience running industrial-scale compute operations 24 hours a day.
At first, they were mining bitcoin. Now, they’re renting out AI compute power.
It’s the same buildings, same electricity, same cooling, only different customers.
Wall Street basically looked at these old crypto miners and realized they accidentally built the physical infrastructure for the AI boom before anyone knew there was going to be an AI boom.
That’s why these stocks started going absolutely bananas.
You’ve got companies like Core Scientific (CORZ), Applied Digital (APLD), Hut 8 (HUT), Iris Energy (IREN), TeraWulf (WULF), Cipher Digital (CIFR), Bit Digital (BTBT), and Hive Digital (HIVE) all trying to position themselves as AI infrastructure providers instead of just bitcoin miners.
Some of them will pull it off.
Some of them are absolutely just putting on an AI costume because that’s what this business does every cycle.
Dot-com. Blockchain. Metaverse. AI. Everybody suddenly discovers religion once the stock starts moving.
But some of these companies really do own valuable assets.
Cheap power is valuable. Cooling is valuable. Data center infrastructure is valuable. GPU access is valuable.
And right now the entire world is desperately trying to get more compute capacity online.
That’s the neocloud trade.
This whole thing reminds me a little bit of the railroad boom. Everybody thinks they’re investing in software.
Meanwhile, the real money is getting made by the people laying down the tracks.
The Other Word: Photonics
Then there’s “photonics,” another word I barely heard six months ago that now apparently determines the future of civilization.
“Photonics” is basically using light instead of electricity to move data faster and more efficiently.
At least that’s how it was explained to me after the third bourbon.
The short version is this: AI systems are becoming so large and so power-hungry that traditional electrical connections are starting to become bottlenecks.
So the industry is increasingly talking about optical networking, optical interconnects, co-packaged optics, silicon photonics, and all these other terms that sound like they belong in a NASA control room.
But the market doesn’t care if the words sound nerdy.
The market cares that AI clusters need faster communication between chips.
And if photonics solves that problem, trillions of dollars are going to chase it.
That’s why you keep hearing names like Broadcom (AVGO), Marvell (MRVL), Coherent (COHR), Lumentum (LITE), Cisco (CSCO), Nvidia (NVDA), and Arista Networks (ANET) coming up in these conversations.
This is the thing people miss about investing: You don’t need to understand every engineering detail.
You just need to recognize when an entirely new vocabulary is entering the market.
Because usually that means an entirely new industry is forming underneath it.
The Market Is Always Inventing New Languages
What really hit me this year is that neocloud and photonics are just the latest additions to a very long list of words the market has forced me to learn over the years.
That’s one of the things I love most about this business. Every cycle comes with its own vocabulary.
The first time I heard people talking about subprime mortgages, I had no idea that phrase would eventually become one of the most important stories of an entire generation of investors.
Then it was TARP and quantitative easing.
A few years later, everyone was talking about flash crashes, sovereign debt crises, bitcoin, cloud computing, blockchain, ICOs, NFTs, the metaverse, Generative AI, and now, apparently neoclouds and photonics.
The funny part is that some of these words disappear almost as quickly as they arrive.
Others become so common that people forget there was a time when nobody had ever heard them before.
There are investors entering the business today who can’t imagine a world before cloud computing or bitcoin.
Just like there was a time when younger investors had never heard the phrase subprime mortgage or credit default swap.
Every generation gets its own vocabulary lesson.
What’s even funnier is that after you’ve been around long enough, the cycle starts to come full circle.
Over the last few years, I’ve spent a lot of time talking about offshore drilling, natural gas infrastructure, uranium, pipelines and power generations.
To a lot of newer investors, those were entirely new industries to learn about. For me, many of those words are old friends. I learned them 20 years ago.
The market has a funny way of recycling old themes while introducing new ones at the exact same time.
That’s why I still love doing this after all these years.
The market is alive. It evolves. It mutates. It reinvents itself constantly.
Every cycle creates new technologies, new leaders, new opportunities, and, eventually, a whole new group of bagholders, too.
That part never changes.
But one thing I’ve learned is that when new words suddenly start showing up everywhere, it’s usually worth paying attention.
Sometimes, it’s just another buzzword that disappears as quickly as it arrived.
And sometimes it’s the first clue that an entirely new trend is being born right in front of you.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs