We're still 'very optimistic' about this AI trade, CEO says

Key Concepts:

• AI (Artificial Intelligence)
• Earnings Reports
• Cloud Growth
• Advertising Numbers
• Backlog Number
• Optimus Robots
• Robotaxis
• S&P (Standard & Poor's 500)
• NASDAQ
• Dow (Dow Jones Industrial Average)
• ETF (Exchange Traded Fund)
• Dollar Devaluation
• Assets

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Current Market Overview

The market is showing mixed signals with the Dow down 60 points, but the NASDAQ is up 193 points. The S&P 500 recently achieved its fourth record close of 2026 (likely referring to 2024) last night, indicating a strong rally.

Upcoming Earnings Expectations and AI Impact

Daniel Newman expresses strong optimism regarding the upcoming earnings reports from Tesla, Meta, and Microsoft, which are due after the bell today. He anticipates "very good things" and expects to see a positive impact of AI on their bottom lines.

• Tesla: While its story is considered "a bit more into the future," the focus for Tesla will be on the development and deployment of Optimus robots and driverless robotaxis.
• Microsoft and Meta: For these companies, the key metrics will be cloud growth numbers and advertising numbers. Newman specifically recalls that Amy Hood for Microsoft delivered a significant "backlog number" last quarter, which he expects to be a talking point again.
• Insatiable AI Demand: Newman highlights that the "demand for A.I. [is] just insatiable." He notes that despite substantial investments in companies like OpenAI and Anthropic, there is "no shortage of capital" flowing into these AI companies, which are "basically fueling the backbone" of the current technological landscape. He expects "big numbers" and "strength" from Microsoft and considers Meta "one of our biggest and best ideas for the year," maintaining a "very optimistic" stance on the overall "A.I. trade."

Market Rally Broadening and Investment Strategy

The market rally is observed to be "broadening out," extending "beyond Big Tech." This shift presents new investment opportunities.

• Diversification Beyond Big Tech: Newman's firm is actively looking into "other areas" for investment, acknowledging that some investors might feel "late to the A.I. trade" or seek more speculative opportunities.
• New ETF Partnership: To capitalize on these broader trends, they have recently partnered with Defiance on a new ETF designed to focus on "mega technology trends."
• Cautionary Note: While enthusiasm is high, investors are advised to be cautious about the accelerated valuations of some companies, especially those that "don't even have revenue yet."
• Driving Factors: The broadening S&P rally is partly fueled by the extraordinary run-up of Alphabet and the stable performance of NVIDIA. A fundamental reason for the continued market strength is the understanding that as the "dollar devalues," investors "got to be in assets," which sustains the S&P's upward trajectory.

Conclusion

The overarching sentiment is one of strong optimism for the AI sector and the broader market. Key tech giants like Microsoft and Meta are expected to demonstrate significant growth driven by AI, cloud services, and advertising. While the market rally is expanding beyond traditional big tech, investors are encouraged to be strategic and cautious, leveraging new investment vehicles like specialized ETFs, while recognizing the underlying economic forces, such as dollar devaluation, that are driving asset accumulation.