We heard from Telsa and Google last week, on Q1 earnings.  And we’ll hear from four more tech giants this week.

Remember, just months ago there were questions about whether the huge capex plans from this group would go forward, after the DeepSeek disruption of late January.

But they didn’t flinch.  Instead, they all pressed the accelerator.  In aggregate, they announced $300 billion worth of capex planned for 2025.  Importantly, all in response to “signals of demand.”

Where do they stand now?

For the most recent quarter, Google and Tesla reaffirmed the big capex plans.  And we should expect more of the same from the cohort this week.

From that point, the focus will turn to Nvidia’s earnings, which will come in late May.

With that, the Trump administration has recently blocked Nvidia’s exports to China, which is thought to be about a 10%-15% revenue hit.

But remember, the headwind for Nvidia is supply, not demand.

On that note, Nvidia announced two weeks ago that new capacity for its most advanced chips has just started production in Arizona, and production in Texas is due in 12-15 months.  That will add to global chipmaking capacity which means Nvidia will be able to fulfill more of the demand backlog.

Amazon’s CEO (Andy Jassy) has said that the AI business could be growing faster if not for chip supply constraints.  So, this U.S. onshoring of chipmaking will effectively press the accelerator on the AI revolution.

With all of this, Nvidia remains the most important company in the world, which makes the trend in this chart below (sparked by the “ChatGPT moment”) the most informative about the current stock market environment:  it’s a correction within a long-term structural trend.

Relative to the ChatGPT moment, Nvidia is growing revenue three times faster, is twice as profitable, and yet its shares are cheaper (forward P/E of 24).  Meanwhile, Nvidia’s market position has never been more dominant, and demand has never been more insatiable.

Trump has been turning up the heat on Jerome Powell to restart the easing cycle.

With that, let’s revisit our discussion from earlier this month on the influence of central bank action on turning points in markets. 

Remember, we looked at this five-year chart of the S&P 500 in my April 3rd note …

Each turning point over the past five years was driven by some degree of central bank “dial turning” (i.e. monetary policy adjustment).

And that’s consistent with the history of major stock market turning points — they tend to be directly influenced by central banks.

The most recent turning point (the top in the S&P 500, the global barometer of risk-asset sentiment) also coincided with a central bank event:  a pause in the Fed’s four-month old easing cycle.

So, will the next turning point for stocks be marked by a central bank event?

Likely.

The bigger questions:  

>Will the eventual Fed action come in acknowledgment of their mistake, in misjudging the inflationary outcome of tariffs (which is demand-destructing)?  

>Or will the eventual Fed action come when something breaks in the financial system, resulting from their overly tight policy (which includes extracting $2 trillion of liquidity from the system over the past two years).

Keep in mind, the Fed’s job is to keep the ship in the channel (price stability and full employment), regardless of external forces.  

But the Fed tends to be reactionary — which means they tend to be late.

And because major central banks, generally, are late to adjust policy, they become a primary contributor to market excesses — in both directions.

With all of the above in mind, what did Chicago Fed President Austan Goolsbee say in the midst of the market correction back in August?  “If the economy deteriorates, the Fed will fix it.”

Yesterday, we talked about what seems to be a “Mar-a-Lago Accord” in the offing.

It’s been fourteen days since “Liberation Day” (reciprocal tariff announcements).  And it has been said repeatedly by the Trump administration that over 75 countries are clamoring to do a deal. 

But no deals done. 

Why?

Are they planning on doing a grand coordinated deal, all at once (and probably over a weekend)?  Maybe.

What would it look like, based on what’s been guided by key Trump advisors:  Tariffs get slashed, in exchange for countries opening up their markets, boosting their defense spending, and committing to buy more from the U.S., invest in American manufacturing, and buy our Treasuries — and isolate China.

If we look at the behavior of gold and the dollar, the market seems to be sniffing out such a deal, to include an agreement to devalue the dollar. 

Gold is up 13% since Trump’s 90-day pause on tariffs just one week ago.  The dollar is down 4%. 

That said, in a prepared speech last week, Trump’s top economist (Stephen Miran) dismissed the conventional economic view that trade deficits get fixed, naturally, through currency depreciation.  Not when you have the world reserve currency.   

Instead, he views tariffs as the solution — not currency manipulation. 

 

While stocks have sharply corrected under tariff fears and the Fed’s missteps on policy, make no mistake the AI revolution continues to charge forward.

Over the weekend, the Trump administration signaled exemptions for critical AI inputs from China, while Nvidia announced it has started production on its most advanced AI chips in Arizona, and will be building “supercomputers” in Texas in 12-15 months. 

This “onshoring” is new global capacity, and that will be like pressing the accelerator on the AI revolution.

And with that in mind, one of the handful of people working on the frontier of this technology revolution said this about the state of AI back in February … 

Elon is talking about teetering on the edge of artificial general intelligence (AGI).  It’s where the machine can reason like a human or better – in any domain.  The next stage, it can constantly improve itself and with no downtime.

Related to that, remember, earlier this year Jensen Huang (Nvidia founder, CEO) said “the ‘ChatGPT moment’ for general robotics is just around the corner.“

He said over the next several years, the combination of 1) agentic AI robots, 2) autonomous cars and 3) humanoid robots will become “the largest technology industry the world has ever seen.”

So, as the crowd obsesses over tariffs, tight money and political mudslinging, the real story is relentless ascent of world changing technology.  

And as we’ve discussed often here in my daily notes, there is a wartime-like effort, by the U.S., to win the AI arms race.

With that, if you can look through the noise and pushback surrounding the Trump agenda, this broad market correction is an opportunity to buy the key stocks that are powering the AI revolution, on sale.  

But isn’t this another tech boom/bust cycle?

For perspective, the AI revolution is as transformative, if not more, than the advent of the internet, but there are clear differences in the investment.  

The dot-com bubble was fueled by a speculative mania. 

Money was being poured into companies with little-to-no revenue (like a few hundred thousand dollars of revenue) – and valued on the basis of eyeballs (web traffic).

On the other hand, as a proxy on the AI revolution, if we step through our AI-Innovation Portfolio — we’ve built a 24 stock portfolio since launching in June of 2023, and ALL but one are profitable — not accounting tricks, legitimate net income.

That’s a big difference.   

And the one company that isn’t profitable, is expected to be profitable this fiscal year.

And all have positive net cash (most in the billions of dollars).

This is a very different technology boom, and it’s still early.

If you want to own the stocks of the companies building the infrastructure to power AI, the companies delivering the capabilities of AI to hundreds of thousands of businesses, and the companies that will best leverage the productivity enhancements from AI, you can find them in our carefully curated AI-Innovation Portfolio.

Consider this:  We added Nvidia in June of 2023, just when the AI revolution was kicking off.  We exited on the catalyst of the 10-for-1 stock split announcement, after the announcement fueled a further surge in the stock. 

So, we sold it last May for 184% return, at a P/E in the high 40s.  

We recently re-entered Nvidia at a forward P/E of 21, down a third from its peak, trading back to its pre-split level — BUT, the company is now producing twice as much revenue, and twice as much profit, and the state of the AI-driven technology revolution is far more advanced than it was just 11 months ago.

So, this correction in stocks revalued Nvidia to a multiple very near the broad S&P 500 market multiple.  That’s extremely cheap for a company with 78% year-over-year revenue growth and operating margins greater than 60%, with $35 billion of net cash. 

The best investors in the world have built their careers in markets like this, buying when others are selling.  

This is an opportunity to buy the technology revolution on a dip.

Here’s how you can join me…  

✅The AI-Innovation Portfolio is about allocating to HIGH-GROWTH.

✅For $297 per quarter ($99 per month), you’ll gain exclusive access to my in-depth research, expert analysis, and timely investment recommendations focused on the generative AI revolution — all email delivered to your inbox. 

✅You can join me by clicking here — get signed up, and then keep an eye out for Welcome and Getting Started emails from me.

Best,

Bryan

The March inflation numbers came in last Thursday at 2.4%.

The last time we saw a number that low was September of last year.

Before that, it was Q1 of 2021.

What happened in September of last year?  The Fed kicked off its easing campaign — with a 50 basis point rate cut.

So, headline CPI is running at a level that supported the launch of an easing campaign, and an aggressive start to it.

Add to this, as of April 1, the Fed has dramatically dialed down its quantitative tightening program (effectively ending it), because there were “signs of increased tightness in money markets.”

This move looks like a clue that something in the financial plumbing might be breaking.

And if we recall back to 2019, it was similarly “strains in the money markets,” that forced the Fed to slash rates, and go back to expanding the balance sheet (i.e. quantitative easing – QE).

With this in mind, let’s revisit some things Jamie Dimon (JP Morgan CEO) said about liquidity conditions back in October — and what he said this past Friday.

Back in October, he warned about the risk of volatility in the Treasury market.

He complained that the banks have tons of excess cash but can’t use it efficiently due to regulatory constraints.  It affects their ability to provide liquidity in the Treasury market, while the Fed is simultaneously extracting liquidity from the Treasury market.

And with that, he implied that we will likely see another episode of big Treasury market volatility, caused by the Fed’s quantitative tightening.

Fast forward six months, and the Fed is still extracting liquidity from markets, though now only at a rate of $5 billion per month (as of April 1).

And we’ve just had a huge spike in the 10-year yield.

What did Jamie Dimon have to say about liquidity conditions now?

He made the same case for regulatory change, for this reason:  so banks could intermediate more in the markets to provide stability, rather than the Fed.

And by Fed involvement, he means more QE.