Washington Burns, Stocks Boom - Here’s Your Play

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The U.S. stock market is performing like a heavyweight boxing champion, taking blow after blow - yet refusing to go down.

First, it was the Chinese AI disruptor DeepSeek, sending shockwaves through Silicon Valley. Investors panicked. Analysts swore this was the moment American tech would finally lose its edge.

Then, the tariff war rhetoric started heating up. Trump’s threats of sweeping trade penalties loomed over the market like a dark cloud. The world braced (and continues to brace) for impact.

And just when it seemed like things couldn’t get more chaotic, Elon Musk stormed into Washington like a man with a grudge and a flamethrower, vowing to reshape government contracts - and potentially upend entire industries in the process.

Through it all, the media’s been running wild. Politicians are stoking fear. Experts are lining up to predict the next big crash.

But the market?

It’s taken every punch. It’s wobbled, sure, but it’s never hit the mat.

Despite every reason it should’ve cracked, it’s still climbing. In fact, it’s not just surviving - it’s thriving.

And here’s the thing…

Listening to the media right now, watching every fear gauge tick higher, and sitting on the sidelines could mean leaving thousands on the table in the months ahead.

Because while everyone’s bracing for the next knockout punch, the market is still standing - stronger than ever.

Let me show you why…

Even a “Crisis” Can’t Knock Stocks Down

While investors were freaking out over DeepSeek, I wrote to you here that it was all a farce. And it seems as though everyone else is just now figuring it out.

The same thing is happening again with tariffs and DOGE. It hasn't happened yet, but sooner or later the rest of the market will catch on that these aren't existential threats.

In fact, they could even push the market higher, as I have written to you before.

You already know that I have been vocal about my concerns about the AI leader Nvidia (NVDA).

My concern is that eventually, capital expenditures move from building the network to building out the services on top of it. This is inevitable and presents real risks to Nvidia’s growth.

In fact, I think Nvidia will eventually see earnings decline. This is why I predicted the company could lose $1 trillion at some point in 2025.

Well, from its intraday high in early January to its recent low a week ago, the company did lose $980 million in value.

But let’s look at the latest numbers on capital expenditures now that we have seen Q4 earnings results for the big AI companies.

Here is a table showing their capital expenditures over the last few years.

These numbers are incredible!

The companies have ramped up their spending in a big way and they are saying they will continue to do so.

With the acceleration in capital expenditures out of the earnings reports, even I’m not sure the end is here just yet for Nvidia.

I even think that Nvidia could deliver blowout numbers when they report in a couple of weeks.

Eventually, this all ends badly — but that is likely still a few quarters away.

So what happens now if Nvidia posts blowout numbers… trade wars don’t erupt… and Elon successfully cuts $500 billion in government spending?

You guessed it.

Three Words: Market. Melt. Up.

There has been plenty of talk about what happens when this AI bull market runs out of steam. But I think it’s helpful to put things into perspective.

Here is a good chart from Bespoke Investment showing how it lines up with the introduction of the internet, comparing the launch of ChatGPT to the introduction of the Netscape browser.

So far, the charts of the stock market performance have lined up almost identically.

Now, I can’t say for certain if the market is still in the early innings of this AI bull run (as the chart implies) or if it’s in the later innings.

In either case, the stock market can go a LOT higher from where it’s at now.

Here is one last chart I shared with our colleagues at Paradigm Press last week, showing the S&P 500 from 1999 into the stock market top in 2000.

Look at the move there at the end.

From the end of November 1999 to the end of February 2000, the NASDAQ Composite went from 3,000 to almost 4,500. That is a 50% move in just three months.

For the last five years, I have said that we will know when this bull market is truly over — and it will be AFTER we see this kind of move.

There are no guarantees in life or the stock market. But I think the setup right now is looking like Trump and Elon might keep the “winning” going!

To Making YOU Money,

Enrique Abeyta