Stocks Are Ready For The AI Supercycle

To investors,

It is hard to quantify the range of emotions felt in financial markets over the last few months. Thankfully, we have data that measures just how historic the market recovery has been. We have literally never seen such a strong rebound in the S&P 500 at any point in history.

Down 14% in the quarter. Now back to a positive 9% gain in the same time period. Volatility is an understatement.

Creative Planning’s Charlie Bilello shows if you zoom out further to the start of the year, you can see that “the S&P 500 has rallied 28% off of the April lows to hit its first all-time high since February 19.”

Ryan Detrick, the Chief Market Strategist at the Carson Group, highlights the new all-time high in the stock market comes with an interesting historical data point — “Stocks have never peaked in June.”

And if you are not convinced with historical data, you may be more interested to see the S&P is following the growth of M2 money supply.

David Marlin says “It’s all about liquidity. The SPX has been moving in sync with Global M2 on an 11 week lag. It’s signaling 6800+ for the SPX.”

So no matter how you look at it, the stock market has momentum. Money printing is driving stocks higher and higher. So this begs the question “which stocks will be the big winners?” Investment firm Coatue recently published their annual presentation on the state of markets and there are three slides worth paying attention to.

First, the firm points out the Mag 7’s reign may be ending. There is no guarantee, but the market is starting to see lower returns from these businesses.

If the Mag 7 is creating lower returns, then who is going to drive the returns of the future? Well, artificial intelligence is an obvious answer. Coatue says they believe a new class of AI winners will take center stage, including AI power companies, AI software, and AI semis.

And the investment firm believes we are in an AI super-cycle.

The super-cycle thesis would bring significant gains to the stock market through a different set of companies than what we have enjoyed over the last 5-10 years. That type of competition for investment dollars ultimately makes companies better, along with increasing the opportunity for returns for investors.

Stocks may have experienced a historic rebound in Q2. Just don’t mistake that rebound for the end of the momentum. These higher prices are likely to create even higher highs. And the pessimists will still be crying while it all happens.

Hope you have a great start to your week. I’ll talk to everyone tomorrow.

- Anthony Pompliano

Founder & CEO, Professional Capital Management

Why Bitcoin & Stocks Are At All-Time Highs with Jordi Visser

Jordi Visser is a macro investor with over 30 years of Wall Street experience. He also writes a Substack called “VisserLabs” and puts out investing YouTube videos.

In this conversation we discuss AI acceleration, why stocks, gold, bitcoin are hitting all-time highs, market outlook for second half of the year, how Salesforce is using AI, the government pressure on the fed to lower interest rates, the current financial mindset of the the younger generation, and more.

Enjoy!

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