The $700bn AI bonanza drowns out everything else.

Transcript

Tom Seven hundred billion dollars, buddy. For real, that is the number being thrown around for this new US-Korea AI semiconductor alliance, and it is absolutely massive.

Marie Wait — wait a second, Tom. Let's get the housekeeping out of the way before you start spending hundreds of billions of other people's money. It is July twenty-sixth, 2026, and this is the Weekend Edition of Investment Flash. I am Marie, joined by Tom and Gerald.

Gerald Yeah look, housekeeping is fine, but Tom is right to be staring at that number. Seven hundred billion between Samsung, SK Hynix, and Nvidia to basically rebuild the global chip supply chain? Honestly, the Financial Times was hinting at this three days ago, but seeing the actual government-backed scale of it is something else.

Tom No way, Gerald — seeing Nvidia at a forward price-to-earnings ratio of only sixteen while participating in a deal this big is just wild. We are talking about a ten percent gain year-to-date for Nvidia, which sounds modest, but the semiconductor ETF is up seventy-six percent. The momentum is just relentless.

Marie Look, I am going to push back here. It is not just about the momentum. This is a structural reshuffle of where chips are actually made. When you see Samsung and SK Hynix getting this close to the US-Nvidia orbit, you are seeing a geopolitical wall being built. It is bullish for the companies, sure, but the regulatory complexity is going to be a nightmare.

Gerald Fair enough, Marie, but the market does not care about complexity when there is that much capital flowing. Samsung and SK Hynix are the clear winners here on the memory side. SK Hynix is basically the only one keeping up with Nvidia's high-bandwidth memory needs right now.

Tom Exactly.

Marie One hundred percent.

Gerald That's the whole story.

Tom See, this is what I mean! The scale is just drowning out every other story. But Gerald, I know you were looking at what is happening in the Gulf. Is that where the value-hunters are hiding?

Gerald The thing is, while everyone is watching chips, Blackstone and KKR just dropped sixteen billion dollars on Kuwaiti pipelines. It is the largest foreign investment in Kuwait ever. Honestly, it is a classic private equity play — geopolitical tension forces an asset sale, and the big Western firms swoop in for the yield.

Marie Hold on — sixteen billion for pipelines in a region that is currently a geopolitical tinderbox? Blackstone is up over four percent in the last session, but it is still down twenty-two percent year-to-date. Are they trying to buy their way back into the market's good graces?

Gerald Look mate, Blackstone is still thirty-two percent below its fifty-two-week high. These infrastructure deals are boring, but they are predictable cash flows. In a world where tech multiples are sky-high, sixteen billion in real steel and oil flow looks like a bargain to people like Steve Schwarzman.

Tom Oh come on, Gerald. Boring? It is a huge infrastructure win! Even Brookfield got in on the action. It shows that even if the world is messy, the big money still wants exposure to energy logistics. It is a massive turnaround signal for Blackstone.

Marie Not so fast. We have to talk about the earnings calls coming up. Morgan Stanley just released a massive buy list before the reports hit. They are telling people to jump into Alibaba, Grab, and even Apple. Tom, you are usually the Apple bull, what do you think?

Tom For real? I love it. Morgan Stanley is calling Alibaba 'too compelling to ignore' even though it's down twenty-seven percent year-to-date. And Grab? They are looking for twenty-two percent revenue growth. If the cloud numbers for Alibaba look good, that stock is going to fly.

Gerald Ha — analysts telling people to 'buy before it is too late' is basically the industry's favorite way of saying they missed the bottom and need to justify their price targets. Honestly, Alibaba has been a 'compelling buy' for three years and it's mostly just been a compelling way to lose money.

Marie Hah — yeah, yeah, that is brutal, Gerald, but you're not wrong. But look at Natera. That's a healthcare pick they added. It's up sixteen percent year-to-date and riding real momentum in oncology. It's not all just bottom-fishing in China.

Tom Wait — wait a second, did you guys see the Amazon and Vertiv numbers? Amazon's earnings per share estimates have surged over four hundred percent in the last ninety days. FOUR HUNDRED PERCENT! And the stock is basically flat for the year. That catch-up trade is going to be legendary.

Gerald Right, and that's the problem. Vertiv's estimates are up nearly four hundred percent as well, but that stock is already up seventy-three percent this year. It's trading at a forward price-to-earnings ratio of about thirty-three. There is absolutely zero room for error there. If they miss by a penny, the elevator goes down very fast.

Marie See, this is what I mean about the expectations being priced in. Amazon being flat while estimates quadruple is a weird signal, though. It suggests the market is terrified that cloud growth isn't enough to offset the retail margins. I'm going to be watching that print on Thursday very closely.

Tom Oh, it's going to beat. Jeff Bezos might not be running the show day-to-day, but that AWS machine is just a monster. Gerald, don't tell me you're bearish on Amazon too?

Gerald I'm not bearish on the company, Tom, I'm just allergic to paying thirty-three times earnings for infrastructure companies like Vertiv just because they sell cooling fans to Nvidia. It's like buying a gold mine because you heard they have a very nice gift shop.

Tom Pff, okay, that's fair. But speaking of things going down, what is happening with the Trump trade? The industrials and energy stocks were supposed to be the big winners there, but Bloomberg is saying the flows are totally fading.

Marie Honestly, this is the most interesting macro shift this week. The industrials exchange-traded fund, ticker X-L-I, is near its highs, but the momentum is gone. The deregulation narrative that everyone was betting on is starting to look crowded and tired. People are taking profits and moving back into tech.

Gerald The energy sector is even worse. Ticker X-L-E is up thirty percent year-to-date, but it's losing steam fast. It turns out that 'drill, baby, drill' is actually bad for oil prices, which is bad for oil stocks. Who would have thought that basic supply and demand still applied in an election year?

Tom Right —

Marie Totally.

Gerald That's it.

Tom But wait, did you see the Robinhood news? Their real-world asset tokenization just jumped fivefold in two weeks! We are talking seventy million dollars in tokenized stocks like GameStop and Nvidia trading on their own chain. This is the future of trading, buddy.

Marie I'm going to push back here. Seventy million is a rounding error for Robinhood. The stock dropped six point six percent in the last session and it's down twelve percent for the year. The market clearly doesn't think tokenized GameStop is the catalyst that saves the quarterly report.

Gerald Yeah look, tokenization is the buzzword of the month, but if it doesn't move the bottom line, it's just a tech experiment. Although, to be fair, the real story in the crypto space is what's happening with Chinese AI stocks. Did you see that note about perpetual futures?

Tom No, what happened?

Marie This is wild. Investors are using crypto exchanges to trade perpetual futures on Chinese AI companies to get around the foreign ownership restrictions. It is a massive regulatory gray zone. They are basically building a back door into the Chinese tech market using crypto.

Gerald It's clever, honestly. Using a decentralized shadow market to bet on state-sanctioned AI leaders. It is the most original way to get exposure I've seen in a long time. But man, the regulatory hammer is going to come down so hard on that once the Beijing authorities catch wind of the scale.

Tom Ha — Gerald, you always find the hammer! Can we just for one second appreciate the ingenuity? People want AI exposure so badly they are using crypto derivatives to hop over the Great Firewall. That is a massive signal for how much demand there is.

Marie Alright, alright — but let's look at the big picture for a second. Our view today is that the market is basically addicted to the AI infrastructure narrative. Between the seven hundred billion dollar US-Korea deal and these massive estimate revisions for Amazon and Vertiv, the 'tech is king' trade is being reinforced every single day.

Gerald Right, but the flip side is that the 'Trump trade' in industrials and energy is cooling off. The dispersion is the real story. You want to be long the chip-makers and short the old-school industrials. It's a momentum rotation, plain and simple.

Marie Wait — wait a second, though. We have to talk about what's NOT being said. The bond market is being completely ignored by the press right now. The investment-grade corporate bond ETF is sitting at its fifty-two-week low. High-yield bonds are barely above theirs. Big Tech is issuing record amounts of debt to fund these AI chips, but the credit spreads are starting to look a bit nervous.

Tom No way, Marie. If the companies are printing money, why does the bond market matter? Apple and Microsoft have more cash than most countries.

Gerald Honestly, Tom, that's exactly what people said in 2007. I'm not saying we're there, but equity exuberance against bond-market stress is a classic mismatch. If those credit spreads widen, it doesn't matter how many chips Nvidia sells — the cost of capital is going to bite everyone. It's the gap nobody is talking about because everyone is too busy staring at the seven hundred billion dollar headline.

Marie Exactly. And that is why we are here. To look at the gaps. As always, none of this is investment advice — we are just three people talking about the numbers so you don't have to read the spreadsheets yourself.

Tom Hey, speaking of reading, I actually read your pick from yesterday, Gerald. That short on China equities? It's looking pretty smart right now with all this regulatory uncertainty. Maybe you're not a perma-bear after all.

Gerald Alright, alright, don't get used to it. Even a broken clock is right twice a day, and even a value investor occasionally finds a trade that doesn't take ten years to play out.

Marie Ha — that's fair. If you're finding these daily deep dives helpful, do us a favor and hit follow on Spotify. It really helps the show. Or you can head over to investmentflash.com for the full digest with all the charts and the source articles we mentioned.

Tom For real, the charts on the US-Korea deal are insane. You have to see the scale of the projected capacity. It's a wall of silicon.

Gerald Yeah, look, it's a lot of silicon, but let's see if the earnings actually back it up this week. We'll be here to pick up the pieces if they don't.

Marie And on that note, we're out of here for the weekend. We'll be back for Monday's London Edition at seven-thirty a.m. London time. Have a great rest of the weekend, everyone.

Tom See ya Monday, buddy!

Gerald Cheers, see you then.