[OP Ed. Note: This Editorial Was Drafted Without AI]
Yo Pit Crazies,
Our Head of Product Development, Hannah Selner, is always wondering what I do on the weekends. It is usually some crazy wood project or other outdoor activity.
Lately, I had my driveway redone with a loop for a putting green in the middle. I started seeding it about 3 weeks ago but needed some more since my chickens ate some of the grass seed. Well I needed to punch the green and did not feel like going to the local hardware store for a grass aerator. So I made some spiffy spiked sandals and walked all over the green. Lot’s of excitement at the G’s this weekend.
I heard that punching holes in the grass helps the roots and lets the seed sprout better. That is the thought anyway. It is like turning over a new leaf. Maybe the chickens will start to add fertilizer instead of pecking all the grass seed up. This part of the season is good for adding seed that will lay dormant until the spring.
Seasonal change is important. Wall Street tends to take on the same fashion but dress it up in different ways. The AI chip run has been driving profits for publicly traded companies but it also helps Main Street since someone has to build the data center. That is a lot of electricians, engineers, etc keeping busy. The current fashion that put valuations of the Neoclouds, AI data center companies, into the stratosphere has started to erode and financing is harder to do. Will those big chip behemoths stay pumped? It is too soon to tell.
The Mag 7 went nowhere this year
The Neoclouds are not the only one spending.
Aside from Apple Inc (AAPL) the Mag 7 is in the same place as it was last year. Alphabet (GOOGL), Amazon.com (AMZN), Meta (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla Inc (TSLA) are all the same or lower as they were last year. Broadcom (AVGO) is actually lower than it was 1 year ago but NVDA is about 10% higher..
1-Year AVGO chart
Investors are already cooling to the Mag 7. I believe the companies that will use AI will be the ones to gain next year now that the AI IPO of Anthropic will come to fruition.
These are big Big Tech Earnings
Traders want to see cash flow and right now they see a lack of it. I have constructed a way to trade this into the 4 quarter and beyond.
Check in here to see when it is time to dive in.
I hope this was helpful,
AG