We’re not done with earnings season yet.
But with most of the Mag 7 plays now reporting, we know that the AI story isn’t showing signs of slowing down yet.
Until that happens, the economy should continue to hum along as AI grows and new benefits for the technology filter down into everyday life.
One proxy for this trend? Capital expenditure spending by the big-tech companies, or capex for short. Currently, it’s soared to $700 billion, nearly triple its level in 2024:
Spending on AI capex is now estimated at over $700 billion, providing a significant tailwind to the economy – provided that AI infrastructure can be built out. (Source: Bloomberg)
Ultimately, this capex growth trend is unsustainable. Markets could be in for a rude awakening when it slows, as investors will conclude that most of the easy money in the market has been made.
But we’re not there yet. It’s full steam ahead. And since October 2022, with the launch of ChatGPT, AI has been a positive Grey Swan event for markets – now one of the largest in total dollar volume.
For now, following surging semiconductor stocks, investors may want to look at other parts of the AI boom, particularly investments related to building out the physical data centers that will make AI possible, such as commodities.
Those goods can’t be generated by an LLM prompt, and have to be physically discovered, removed from the ground, and refined.
Plus, commodities tend to fare well in inflationary times, so if expectations for AI-driven deflation fail to pan out, there’s a built-in secondary way to profit.
If you’re looking for a company that can play to the current AI buildout, but also has some strong positioning for potential sticky inflation as a commodity play, check out Grey Swan Pro. (See: Shadow Stocks.)
~ Andrew
P.S. This week, Addison is visiting family out in Maine, and I’m at the Consensus Conference in Miami, learning about all things crypto – ideal timing with the Clarity Act moving forward.
So no Grey Swan Live! But we’ll be back to our regular schedule next week.
