AI Is Still Early
AI sits in the third inning of a long game. Less than 5% of companies have gone down the AI path, so this is still early in the revolution. Earnings season proved the point.
The clearest signal came from hyperscaler earnings and massive cloud growth across Alphabet, Microsoft, and others. That growth shows enterprise use cases are speeding up. Demand for chips outstrips supply by about 12 to 1, based on recent trips across Asia over the last 6 to 8 weeks. With numbers like that, it is hard to see how anyone could be bearish.
Alphabet
Google showed strong demand, but its heavy spending (capex) put people back on their heels, and the stock reaction last week was dramatic. The spending is needed. This is an arms race, and Google Cloud growth is huge, but Google must keep spending to compete with Microsoft and Amazon.
If Alphabet had reported this week instead of last week, the reaction would have been different, more muted and probably more positive. Last week there was worry about what hyperscaler earnings would reveal. Now that more hyperscalers have reported, overall demand is clearly strong and that concern is settled. Tech earnings look far more bullish at the end of this week than they did before.
Microsoft and Amazon
The Microsoft quarter was an inflection point for the whole tech space. Azure is surging and co-pilot is growing. Amazon Web Services is also surging, and Amazon said it is ready to spend $220 billion. Both names show demand accelerating. As demand climbs, that feeds a chain of winners: bullish for cloud, then for chips, then for software. Both remain buys even as they move higher.
Apple
Apple finally has a real AI strategy, laid out at WWDC, which matters for the next chapter of the Apple story. Tim Cook is handing the keys to Turnis at a good moment, after a historic tenure. Apple is a $5 trillion company that pulled back some on memory supply headwinds, a problem that hits others too, not just Apple. The core story is iPhone growth plus AI.
Apple showed growth almost everywhere last quarter, in Mac and wearables, with only iPad slipping a bit. The turnaround in China has been tremendous. A multi-year upgrade cycle is starting. The iPhone 17 has been a surprise upgrade cycle that caught investors off guard, and 20% of the install base still hasn't upgraded in three and a half to four years. A foldable phone probably won't arrive until 2027.
Korea, Memory, and Micron
Memory drives the AI revolution, and Korea is the golden child of it. Korea's market saw next-level volatility. The Kospi fell almost 11% Monday morning, then dropped again the next day, maybe 8%. A hedge fund faced margin calls tied to SK Hynix and Samsung. Then the Kospi had its best day ever, and SK Hynix posted record earnings and rose 30%. Leveraged ETFs drove some of these parabolic swings. The government stepped in to try to stabilize things.
Korea will grow more important to the global market thanks to memory and chips. These gut-check moments and heavy volatility will keep coming, so investors should ride them out and stay focused on the winners. A sell-off is a chance to jump in. Micron is a winner too. You can count the memory players on one hand, which raises supply worry, but those companies will be massive winners.
Cybersecurity
Cybersecurity could double in three years. As more AI agents and more attack surface spread, this becomes a golden age for the sector. The core leaders are CrowdStrike and Palo Alto. Investors keep underestimating this space.
Tesla and SpaceX
There is over an 80% chance SpaceX acquires Tesla by the end of next year. Tesla is in a digestion period now, but it is building out physical AI infrastructure. Rome wasn't built in a day, and neither will this be. You can't talk about the AI revolution without Tesla and SpaceX. Both are core winners and worth buying at current levels for anyone who believes in AI. In a few years, an ordinary car ride could be a robotaxi.
Bottom Line
Every major name here (Apple, Amazon, Meta, Microsoft, and Google) stays a core piece of the AI revolution. Earnings validated the thesis. It all comes down to the numbers, and the numbers point up.
