January 27, 2025 at 08:01PM
The theme in investing today is simple: AI isn’t some kind of walled-off, near-impossible and extremely expensive software; it’s going to be cheap to make a cheap to run, at least for most business applications.
That redirects the market power away from the chipmakers and hyperscalers to companies using AI to become more efficient. It makes AI more accessible and easier to deploy. That’s great news for anyone who is a shareholder of those companies.
Now obviously it’s bad news for chipmakers and the megacap tech companies who were trying to build an AI moat. But it’s great news for many companies. We’re starting to see the market figure that out.
So while Nvidia is down 18% in the largest single-day loss of market cap for any company ever, there are many winners in the ‘real economy’. That’s why there are more companies in the S&P 500 up today than down, which is incredible on a day when the index is down 1.9%. Now some of that is falling Treasury yields but I think more of that is coming as pricing power is moved from Nasdaq companies to main street companies.
The Dow Jones Industrial Average is now up 0.5% after opening deeply red, or up 200 points after falling 1000 points at the pre-market lows.
This article was written by Adam Button at www.forexlive.com.