AI growth overrides geopolitical oil shocks
The guest reflected that the massive structural tailwinds of the AI trade have overridden traditional macroeconomic drag factors like the Strait of Hormuz oil supply disruption.
The argument
Despite oil rising to $120 due to blockages, the S&P 500 did not suffer the severe downturn previously anticipated. The guest argued that the sheer force of the compute scramble and hyperscaler spending insulated the broader market from geopolitical shocks.
The thesis, stress-tested
✓ What validates it
- ✓S&P 500 continues to make new highs despite elevated energy prices
▸ Risks discussed
- ▸Further escalation in the Middle East could still break market resilience
- ▸Oil prices rising past $150 could eventually choke consumer spending and corporate margins
Hear it yourself
"the semiconductor index constituents. Right? So you've got CapEx, which is, you know, not being realized right now. It does it knocks free cash flow, but not earnings, obviously. And it's beating into the earnings boom over here. So the argument is there's some circularity underneath the surface, and I would I would acknowledge that. I mean, there's no way you can basically add up the the increase in earnings over here and the increase in CapEx over there and realize that one is one hand's giving to the other. But it doesn't kill the the overall story."
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