Puck

After the confetti bomb of Liberation Day, the market has been driven by tariff talk. Straight down then straight back up. Those returning from tikki-tour might not fully appreciate the emotional disco of the YTD chart. What all the Tariff Talk has done, is shift the gaze of CNBC and the like off the AI ‘narrative’. The engine, the Mark Ealham, of 2024 stock market returns. And yet companies continue to invest, continue to plot and scheme, continue to pivot business models to capture the productive oomph of generative AI. And all the riches it portends. For investors, the play remains at large. For many, buying into the AI thematic is done through the shiny ETF complex, where there is no shortage of options, with hundreds of baskets to gain exposure, largely, to all the same names. Indeed, the large indices are packed full of AI beneficiaries from healthcare, where Large Maths Models are revolutionising drug discovery, to Financials, where swathes of lackeys sit wide eyed at the thought that one NVIDIA chip could wipe out their entire floor. No more Monday night 5-a-side. And of course, there are the IT companies themselves, all knee deep in ball pen of AI. All told almost 70% of the S&P 500 is ‘in the game’. Which likely leaves Wayne Gretzky muttering in his hot tub. The lay up in IT is also increasingly challenged, more so given that the once asset light business models of many operators are increasingly loaded with physical resources to build out the infrastructure required to store the zizza-bytes of data. It suggests that most investment dollars have been lavished on the consumers of AI, less so on the basic resource providers that enable it. Think the likes of natural gas, water and steel. And land. Stuff. Hard assets. All, are under represented across both mainstream and thematic AI baskets. And under represented in the majority of both institutional and private client portfolios.

“I skate to where the puck is going to be, not where it has been.”
– Wayne Gretsky