🍔Where We Are in the AI Cycle

Past the buildout phase and entering the adoption phase

As SPX treaded water in a tight daily range, intraday volatility was through the roof. This week markets got a big boost from the Fed cutting rates, offset by bad news on the AI bubble front. Through all this, major indices finished the week near all-time highs.

In times like these, it can be tempting to sell stocks at the top. However, history shows that highs are more likely to be broken than not.

Right now, the market is concerned about the durability of the AI bubble. Key infrastructure providers like Oracle and Broadcom are selling off despite good earnings results. Investors are reassessing key assumptions.

As we transition from the buildout phase to the adoption phase of the AI cycle, expect more competition and encroachment. Not all companies will thrive. It won’t be smooth sailing anymore!

The rest of this article is for premium members. Today’s post covers:

• Fed cuts interest rates — hawkish or dovish?

• Global yields are rising and what this means for equity markets

• Oracle’s earnings report and big selloff

• Chips are done rallying

• Where are we in the AI adoption cycle?

• Our portfolio and how to position for the bubble bursting