Consider investing in Hyperscalers as a lower-risk, highly flexible proxy to capture growth in the AI infrastructure boom. Look into structured notes tied to Hyperscalers if you want exposure to AI growth alongside downside protection targeting double-digit yields. Exercise caution when entering the broader semiconductor space, including Nvidia, due to historically elevated valuations that have become disconnected from market norms. Prioritize Financials and Banks as attractively valued indirect plays that collect lucrative fees from the ongoing AI-driven debt and M&A wave. Prepare for potential short-term volatility in Bitcoin (BTC) as it faces near-term regulatory delays and a risk of dropping below $60,000 in August.

Hyperscalers (AI Infrastructure)

• Hyperscalers are capturing roughly 30 cents of every dollar flowing through the AI food chain.
• Sentiment around hyperscalers had been very negative earlier in the year, but they are viewed as insulated and well-positioned to benefit from the AI buildout.
• As token costs decline, hyperscalers and software companies using those tokens to develop new products stand to benefit.
• Hyperscalers are considered a safer way to play the AI theme because they have the flexibility to dial back capital expenditures (CapEx) if needed, unlike many private frontier labs.
• They are a popular underlying asset for structured notes and yield-seeking products because they offer downside protection while targeting double-digit yields.

Takeaways

• Consider investing in hyperscalers as a lower-risk proxy for the AI boom compared to early-stage or private AI startups.
• Look into structured products tied to hyperscalers if you want exposure to AI growth alongside downside protection.

Semiconductors (Semis)

• Semiconductor stocks as a group became extraordinarily expensive, trading at valuations well above historical norms and the broader market.
• Nvidia was notably one of the weaker performers among semiconductor stocks despite massive attention on the broader chip sector.
• Valuations in the semiconductor space grew disconnected from historical averages due to heavy, concentrated buying.

Takeaways

• Exercise caution when entering the semiconductor space due to elevated historical valuations.
• Prioritize entry points carefully rather than chasing momentum in popular chip stocks.

Financials / Banks

• Financial sector stocks lagged the broader market for a large portion of the year, a trend viewed as a disconnect given the high volume of deal-making.
• Banks are positioned to capture fees from the massive wave of AI-related debt issuance, equity offerings, and mergers and acquisitions (M&A).

Takeaways

• Look at financial institutions and banks as indirect beneficiaries of the AI and private market boom, as they collect underwriting and advisory fees regardless of which specific tech company wins.
• Financials offer a more attractive historical valuation profile compared to crowded technology sectors.

Infrastructure Assets & Data Centers

• Infrastructure assets traditionally offer strong correlation to inflation and tend to perform well in moderate-to-high inflation environments.
• Traditional infrastructure investments (like energy pipelines and utilities) have become heavily intertwined with the AI data center buildout.
• Building data centers is increasingly bringing additional local costs, such as the responsibility for community power, water, and municipal grid viability.

Takeaways

• Recognize that traditional infrastructure funds may no longer provide true diversification away from the AI and technology trade, as power and data centers now dominate the sector.

Japanese Yen (JPY) / Bank of Japan (BOJ) Interest Rates

• The Japanese Yen has historically served as a major financing engine for global assets via the carry trade.
• The probability of a Bank of Japan (BOJ) rate hike climbed to 60%, driven by hawkish meeting minutes and currency intervention.
• The Yen has faced downward pressure, weakening back toward the 160 level against the U.S. dollar despite intervention from the U.S. Treasury.

Takeaways

• Monitor global carry trade unwinds as the BOJ moves closer to raising interest rates, which can create volatility across global asset classes.

Bitcoin (BTC)

• Bitcoin faces near-term vulnerability due to regulatory delays, specifically the Clarity Act vote being pushed out to September.
• Broader multi-day risk-off events in the wider market could put downward pressure on Bitcoin's price in the short term.
• A tactical short-term prediction was made that Bitcoin could drop below $60,000 during the month of August.

Takeaways

• Treat short-term Bitcoin predictions as tactical plays rather than long-term structural calls on the asset's viability.
• Watch out for regulatory timelines, such as the Clarity Act vote, as catalysts for near-term price volatility.