To The Moon

The market is still an AI market

Despite repeated pullbacks, investors keep returning to the same trade:

• AI infrastructure

• Semiconductors

• Large-cap technology

The sequence was:

1. Semiconductor stocks became extremely overbought.

2. A disappointing report from Broadcom triggered profit-taking.

3. Investors briefly rotated into other sectors.

4. Strong results from Micron Technology and continued AI spending optimism pulled money back into tech.

The key takeaway is that investors are not selling AI because they think the story is over. They're selling because positioning became crowded and valuations stretched.

The market's biggest debate is no longer "AI or no AI"

Micron

Instead, the question is: How long can hyperscalers keep spending at current levels?

• AI spending economics

• Rising interest rates

• Higher financing costs

• "Circular AI economy" worries

Yet the data points from $Micron Technology(MU)$ , plus announcements involving $Qualcomm(QCOM)$ , Meta Platforms, $Microsoft(MSFT)$ , and OpenAI suggest AI capital spending remains extremely strong.

At least for now, earnings are validating the spending.

The Fed became more important than the war

• Markets sold off when inflation looked sticky.

• Markets sold off when rate-hike fears increased.

• Markets reacted sharply to Fed Chair Kevin Warsh.

Meanwhile, even major geopolitical developments eventually became secondary to:

• Inflation

• Interest rates

• AI earnings

That's usually a sign the market views the geopolitical risk as temporary while viewing monetary policy as structural.

Breadth is improving beneath the surface

One of the more important observations is that:

• The Nasdaq was volatile.

• Mega-cap tech wobbled.

• Small caps and mid caps often held up better.

Several strategists in the reports highlighted improving earnings momentum outside the Magnificent Seven. If true, that's healthy.

Bull markets become fragile when only a handful of stocks rise. They become more durable when:

• Industrials participate

• Financials participate

• Small caps participate

• Mid caps participate

The reports suggest that broadening process may be underway, even if it is messy.

SpaceX became the new center of gravity

The IPO of $SpaceX(SPCX)$ appears to have had psychological importance beyond its market value.

According to the narrative:

• Investors sold other AI names to raise cash.

• SpaceX immediately entered the ranks of the largest U.S. companies.

• The IPO reinforced investor appetite for growth and technology.

The symbolism matters: the market's attention remains concentrated on transformative technology businesses.

The biggest risk going forward

Inflation + higher rates + slowing consumers.

If inflation remains above target and Warsh's Fed becomes more hawkish, then:

• AI investments become more expensive to finance.

• Valuations face pressure.

• Consumer spending could eventually weaken.

The market currently believes AI earnings growth can offset those concerns. The next major test is whether incoming inflation data and future earnings continue to justify that optimism.

Is the AI boom merely expensive, or is it a bubble?

[Salute]

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.

[Salute]

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