The market continues to be in full irrational exuberance mode. Like I always say, make hay while the sun shines.
Remember all that AI bubble talk last fall? The doom-and-gloomers said AI couldn’t go any higher. Well, look where all the AI stocks are now. Particularly the hardware.
Before the Big Picture, today is your LAST chance to register for Ben Sturgill’s Simpler Options Bootcamp:
The Big Picture
The diagram below shows the 50 public companies worth over $10B with the biggest gains in market capitalization between February 27 and May 8.
Source: Financial Times, data by FactSet
Notice they’re almost all AI-related (teal). And I’d argue that the FT got it wrong on at least two stocks on the chart.
- Caterpillar Inc. (NYSE: CAT) is an AI infrastructure play. Along with its subsidiary Solar Turbines, it provides gas-turbine and solar behind-the-meter (BTM) generator sets used in data centers.
- Sandisk Corporation (NASDAQ: SNDK) is a pure-play AI hardware and memory stock.
Now, people are starting to say “AI bubble” again.
So, is this market functioning on emotion, or fundamentals?
At the end of the day, I don’t really care. Mostly I trade short-term. I ride momentum and trends.
I understand that some people take a more precautionary approach. And that’s fine. You have to do what’s right for you.
For me and what I teach, when we’ve got these sectors and trends, just ride. It’s really kind of a trend-following type situation. Like the turtle traders (I’ll link the book below).
My Take
The interesting story of the day is how home builder PulteGroup, Inc. (NYSE: PHM) and Nvidia Corporation (NASDAQ: NVDA) are teaming up with startup Span to put data nodes on homes.
I’m going to be tracking this one closely.
I’ve been building my own localized AI and it’s been an absolutely massive productivity bug buster. From trading, to business and my personal life, but also for mindset. A lot of the boring, repetitive type work, you can now delegate to agents. So, I think you should be taking advantage of this technology.
This data node story is more proof that talk of an AI bubble is nonsense. They literally cannot get enough compute. And these data centers are multi-year projects. It’s not like you turn up a data center in a month. Or even six months. They take years to construct, to outfit, to get the infrastructure to them. Fractional data center nodes will speed things up.
Not only that, it will make data and electricity less expensive. It reminds me of getting a solar array and a Tesla Powerwall. You use what you need, then sell back to the grid.
With these data nodes, people will pay a much lower set price. The hyperscalers can tap into the excess. Big respect to PulteGroup, Nvidia, and Span.
Watchlist
NVDA isn’t your typical day trade setup. Consider it more of a swing trade idea. Or even an investment if you’re a long-term investor.
First, take a look at the 1-year chart:
Source StocksToTrade NVDA 1yr-1day candle, multi-day, multi-month breakout.
From around the time everyone was screaming “AI bubble” last fall, NVDA has been in sideways chop mode. I just think it got ahead of itself. Remember, it was all anybody talked about for about a year and a half before that.
Here’s the 6-month chart with Oracle support & resistance:
Source StocksToTrade NVDA 6m-1d, Oracle S&R breakout testing major resistance
NVDA looks like it could flip the major resistance. Everyone’s AI darling is on the move again.
On My Radar
- The book I mentioned above: “The Complete TurtleTrader” by Michael W. Covel. It’s worth a read.
- More on the Nvidia and PulteGroup tie-up. Watch this and other AI- and data-themed deals. There will be more.
- Another big tech deal: Intel Corporation (NASDAQ: INTC) signed a deal with Apple Inc. (NASDAQ: AAPL) to make chips. Win-win, and a win for US manufacturing.