This summer has been all about rotation.
Chinese stocks have ripped higher…
Money is flooding into small caps…
And rate-sensitive groups like homebuilders and regional banks have also been on a tear.
This is healthy. Rotation keeps a bull market alive. Without it, rallies stall out.
But we can’t lose sight of the big picture.
Artificial intelligence (AI) is still the defining trade of this cycle. And the market is reminding us of this.
Last Thursday, Broadcom (AVGO) crushed earnings. It also revealed a $10 billion custom AI chip order (which is widely believed to be from OpenAI).
Shares of AVGO spiked 9% the next day. The news also sparked a huge rally across the AI space.
You see, Broadcom is a $1.7 trillion bellwether—the world’s #2 chipmaker after Nvidia (NVDA). If AVGO’s AI business is booming, the entire AI complex is in great shape.
Then came Nebius Group NV (NBIS).
On Monday, the data center upstart announced a six-year, $19.4 billion deal with Microsoft (MSFT).
NBIS stock exploded 49% the next day. AI names soared in unison once again.
Yesterday, AI investors got more good news.
After the bell, Oracle Corp. (ORCL)—one of the AI hyperscalers—reported earnings. The company’s cloud infrastructure revenue soared 55% year-on-year. The company also reported that it had signed four multibillion-dollar contracts last quarter.
As we go to press, ORCL is up 40%. Many other AI stocks are rallying on the news, including Bloom Energy Corp. (BE), which is up 18% on Oracle’s report.
What do you make of all this?
Rotation is real. Don’t ignore the action in small caps and rate-sensitive sectors. But AI remains the core trade.
Every major earnings beat, contract win, and hyperscaler expansion is screaming the same message: Demand for AI compute isn’t slowing down.
Of course, if you’ve been following along in my RiskHedge Live advisory, none of this should come as a surprise.
We added Broadcom to the portfolio back in June. Then in August, we picked up Nebius and Bloom Energy. And we’ve been slowly adding other AI leaders that should do well in the current cycle.
If you’re serious about trading the AI boom—and not chasing names after the fact—consider signing up for RiskHedge Live. It’s where I share my latest trades in real time, so you can act quickly when new setups form.
Justin Spittler
Chief Trader, RiskHedge
