The market is pricing AI in everything but oil.

Transcript

Tom If you thought AI was just about chips, wait till you hear what it's doing to copper, oil, and the Chinese auto market. That's all ahead on Investment Flash, Weekend Edition.

Marie May twenty-third, twenty twenty-six, Weekend Edition. I'm Marie, with Tom and Gerald. We're tearing into a market that's pricing AI into everything except oil. Let's get into it.

Marie Tom, you were pounding the table on Nvidia yesterday — it dipped in Friday's session, you buying more?

Tom Every dip, Marie. I said buy Nvidia, and I meant it. The AI gold rush is still on — net profit tripled year-on-year. That's not a dip, that's a sale.

Gerald And the copper index call from yesterday — up another notch today, I'd wager. Bloomberg's framing copper as an AI stock is like catnip for you, Tom.

Tom Ha, you know it, Gerald. Freeport-McMoRan's up nineteen percent year to date, Southern Copper twenty-three. The thesis is brilliant: AI power demand is decoupling copper from Chinese construction.

Gerald Brilliant? Or completely untethered from reality? Look mate, copper's still an industrial metal. If AI capex slows even a quarter, the correlation with traditional macro reasserts. And a forward P-E of sixteen-point-six for Freeport isn't cheap if that story breaks.

Marie No but Gerald, that's exactly my point — the narrative is what's driving price right now, not the traditional drivers. It's a regime change play. Data centers need copper, and we're building them like never before.

Tom Right — and Nvidia, TSMC, Samsung, they're all minting money. Nvidia's forward P-E is seventeen. Seventeen! For the company at the heart of the AI buildout. That's not priced for perfection, that's priced for the runway we've got.

Gerald To be fair, Samsung's memory chip business is a direct play on AI data centers, and they're near a fifty-two-week high. But the whole semis complex is riding a wave of orders that could flip if hyperscalers blink.

Marie Hold on — the same AI demand that's making Nvidia rich is squeezing Chinese automakers. Memory chip shortages from AI are hitting BYD and Xpeng. Their costs are up just as they're in a price war.

Tom Exactly — that's the flip side. BYD's down over seven percent year to date, near its fifty-two-week low. Xpeng's down twenty-three percent. That's a sell signal if I've ever seen one.

Gerald Alright, but the sell might already be baked in. The bear case for Chinese autos is crowded. The real risk is if this memory crunch spreads to US or European automakers. That's not in the tape yet.

Marie See, THIS is what I mean — AI's rippling through supply chains in ways nobody modeled six months ago. It's not a contained tech story anymore. It's hitting copper, it's hitting cars, it's hitting energy.

Tom And energy is the one place the market isn't pricing AI — because the Strait of Hormuz is stealing the show. Two MarketWatch pieces basically warn: if Hormuz isn't reopened by August, we get a two thousand eight-style oil train wreck.

Gerald US Oil Fund is up over a hundred percent year to date. If the Strait stays shut, there's more upside. But the bear case is a diplomatic resolution — one press conference from Tehran and crude collapses.

Marie And that's the Fed's problem. Kevin Warsh steps in as chair, and he's greeted by an oil shock. MarketWatch calls it a curse — new Fed chiefs getting tagged by downturns. If oil spikes, he can't cut, and equities get squeezed.

Tom So the oil trade is a binary bet. Are we long US Oil Fund or short oil volatility? Because Goldman's out with a hedge: VIX is cheap at under seventeen, buy puts to protect the portfolio.

Gerald Goldman recommending a hedge after the market hits all-time highs — talk about a free retirement plan for options desks.

Marie Oh come on — but he's not wrong. The VIX is near its fifty-two-week low, so insurance is cheap. If Warsh stumbles or Hormuz explodes, that hedge prints.

Tom I'd rather be long the AI trade and sell that volatility. Bet that the AI narrative outlasts the Hormuz deadline. Buy Nvidia, buy Freeport, sell VIX.

Gerald That's a high-conviction play only if you're comfortable with the August tail — because the opposite trade, long USO and short hypergrowth, is the classic stagflation hedge. Both can't work at once.

Marie And let's not forget the consumer. Bloomberg's out with gas at four-fifty a gallon forcing people to cut dining out. That's a shift from discretionary to staples. Consumer Discretionary ETF near a fifty-two-week high? Might be time to sell.

Tom Wait, but is it just gas? The AI wealth effect might be insulating the top end. People buying Nvidia might not feel the pinch at the pump. The Consumer Discretionary ETF is still flat on the year.

Gerald Tom, three-quarters of the economy is consumer spending. If gas stays high, it will show up in retail. And staples are up over nine percent year to date — that's a defensive rotation hiding in plain sight.

Marie Right — and the India RBI story is a canary. They paid a record dividend but missed estimates because of energy import costs. The rupee's under pressure, Indian equities are down over eleven percent. If oil climbs, EM central banks have a brutal choice: defend the currency or support growth.

Tom So EM stress is building, but nobody's talking about the yuan or yen. That's a second-order risk. If the dollar stays strong under Warsh, EM rates could blow out.

Gerald Exactly. And the crypto world is doing its own thing — Bitcoin's stuck between seventy-six and seventy-eight thousand while AI tokens like Fetch dot ai and Hyperliquid surge. CoinDesk calls it an altcoin rotation.

Tom I love it — the AI narrative spilling into crypto. That's my kind of crossover. Fetch dot ai and Hyperliquid are momentum plays, pure and simple.

Gerald Bitcoin range-bound while alts pump? That's classic late-cycle behavior in crypto. The speculation is moving to the fringe.

Marie Not so fast — Ark Invest bought twelve and a half million dollars of Bullish stock over four days. Cathie Wood is still buying the dip in crypto equities. If you're a believer, that's a signal.

Tom Buddy, Ark's been buying dips that kept dipping. Bullish stock is down twenty-four percent year to date. I'm not touching it until I see a reversal.

Gerald Yeah look, Ark's moves are often a contrarian indicator at this point, but twelve and a half million is real money. Still, no second source on that, so I'd treat it as noise.

Tom Alright, so we've got AI everywhere, oil tail risk, consumer tightening, and crypto rotation. What's the actual play here, Marie?

Marie Our view: the market's running multiple narratives that can't all be true. You can't have a massive AI capex cycle, an oil shock, and a soft consumer all at once. Something gives.

Gerald The pairs trade is the only clean expression. Either long AI and short oil volatility, or the stagflation hedge: long US Oil Fund and short hypergrowth tech. Pick your tail risk.

Tom I'm in camp one — AI outlasts Hormuz. The tech earnings are too strong to ignore. Seventeen times forward on Nvidia? That's my bet.

Gerald Tom, remember when you said semis were cooked in Q2? Then they roared back. You might be right again, but if oil spikes to one-fifty, the whole risk spectrum reprices.

Tom Ha — fair enough. Every quarter I doubt, and every quarter Nvidia proves me wrong. I'm holding my shares.

Marie And we'll see if the copper-as-AI-stock thesis holds. It's the most original take today — if AI power demand decouples copper from Chinese property, it's a game changer. But actual AI power usage data is still sparse.

Gerald Exactly — the narrative is powerful but unproven. That's why the Freeport trade needs a stop. If copper doesn't hold its correlation with tech earnings, you bail.

Tom Alright, let's wrap. As always, none of this is investment advice — just three friends dissecting the signals.

Marie If you're just finding us, hit follow on Spotify — or check investmentflash.com for the full digest with charts and sources. We're back at ten a.m. London time tomorrow, Weekend Edition.

Gerald See you then. Keep an eye on those Hormuz headlines.