When it comes to investing in AI, the tech giants have certainly opened their wallets...

Managing Risk in the 'AI Gold Rush' By Joe Austin, senior analyst, Chaikin Analytics When it comes to investing in AI, the tech giants have certainly opened their wallets... Meta Platforms (META) plans on spending more than $60 billion this year. CEO Mark Zuckerberg says one data center will be "so large it would cover a significant part of Manhattan." Meanwhile, Google parent Alphabet (GOOGL) expects to spend $75 billion this year. And Microsoft (MSFT) is planning for $80 billion. Amazon (AMZN) is the biggest spender of all. This year, it expects to spend roughly $105 billion. That's up from $78 billion last year. That's some $320 billion in total among just those four big companies. Without a doubt, AI has the potential to change how we live and work. It will automate repetitive tasks and increase efficiency. It will help both people and entire organizations make better decisions. And in an industry like health care, it can have a huge impact in areas like diagnostics, treatment, and the discovery of new drugs. But today, the investments are huge – which carries a certain level of risk. And when it comes to talking about a payoff, the big spenders don't have much to say. Amazon says it won't comment on revenues from its AI investments. Microsoft says it's too soon to tell if the investments will generate value. Alphabet says its AI investments are already paying off. But the company is including AI as part of its search business, which has been around forever. Alphabet also won't quantify how big that payoff is. Meta's chief financial officer Susan Li is more honest. As she put it during the company's most recent earnings call...   There will, I think, be pretty clear monetization opportunities here over time, including paid recommendations and including a premium offering, but that's really not where we are focused in terms of the development of Meta AI today. The arc of technology is always that there's a big investment up front for an uncertain payoff down the road. And none of these Big Tech companies seem to be overly worried about making money. In fact, that $320 billion they're spending this year is only slightly more than the roughly $314 billion in net income they reported in the past 12 months. So how might all this end up? Luckily, history has some great examples to consider... Recommended Links: Crisis Alert: No. 1 Recommendation in the Face of Financial Turmoil There's no sugarcoating it anymore: For stocks and the economy, things could soon go from bad to worse. But for ONE strategy (outside of stocks) from our friends at Stansberry Research, it's about to become a field day... because it actually works BETTER in a recession and a possible stock market crash. It's a way to see income and capital gains with LEGAL obligations during this period – on a reliable schedule and with a 93% win rate since the pandemic. Due to these extreme market circumstances, they're reopening an extraordinary invitation to see it in full here. The DOGE Agenda (Nine Stocks to Buy Immediately) Every investor in America is trying to figure out what Elon Musk will do in Washington, D.C. in the coming weeks. Now, one Boston-based think tank – who has studied Musk's work for decades – is stepping forward to share what they've found. They believe his TRUE plan is far more radical than anyone realizes. It could change the way you live, work, get paid, and collect Social Security... AND it could make more people rich than all of Musk's previous ventures PUT TOGETHER. Full breaking story here. Investors can't get enough of AI. On average, the stocks of the big four spenders were up nearly 40% last year. That crushes the roughly 25% return for the tech-heavy Nasdaq 100 Index over the same time frame. And despite choppy markets in 2025, investor enthusiasm remains strong... On average, share prices for the group of big four spenders are down just more than 4% year to date. That's about the same as the nearly 4% decline for the Nasdaq 100 so far in 2025. So enthusiasm is high. But what about that payoff? History has two good outcomes to consider... They're both extreme, and the eventual outcome is likely to be somewhere in the middle. But they can be a useful framework to think about the road ahead. One outcome is "winner takes all." In it, a company develops a language model so great that it leaves everyone else in the dust. And we've seen this before. Each of the big four spenders is just that – a winner.  Microsoft has a near monopoly in the office. Google owns Internet search. Meta dominates social media. And Amazon is the king of online retail. But looking ahead, those dominant positions might not matter. Disruptive technologies like AI often leave past winners in the dust. For our big four spenders, they would still have great businesses. But some of them might be less profitable – or less relevant. Another outcome is the doomsday scenario of "profitless prosperity." In it, AI is a huge growth business, but also one in which it's structurally impossible to make money. We've seen this before, too. And there are great examples both in and outside of tech... Within tech, DRAMs and disk drives became graveyards for investors. And outside of tech, look no further than the airlines... Since airlines were deregulated in 1978, air travel has seen massive growth. According to estimates by the International Air Transport Association ("IATA"), airlines flew a record 4.9 billion passengers in 2024. Airline revenues increased more than 6% to $965 billion. That's a record, too. But the IATA also estimates that airlines made a puny $31.5 billion on nearly $1 trillion of revenue. That's an operating margin of just more than 3%. And from 1978 to 2024, more than 200 airline companies went bankrupt. If you've ever owned an airline stock, you know this pain. So with AI, what's an investor to do? AI is a huge opportunity. And it's not one you'll want to miss. Of course, one approach is to pick out individual stocks. As I've discussed, plenty of investors have been piling into the stocks of the big four AI spenders. Another approach is to go with diversification. With exchange-traded funds ("ETFs"), you get an easy way to gain exposure to a basket of different stocks. And in the short term, before the dust settles, that can be a great way to capture the enthusiasm of the market. Turning to the Power Gauge, I have my eye on two in our system – the Global X Artificial Intelligence & Technology Fund (AIQ) and the Global X Data Center & Digital Infrastructure Fund (DTCR). The Power Gauge currently gives these ETFs a "neutral+" rating and a "bullish" rating, respectively. Meanwhile, an AI ETF with an interesting twist is the KraneShares Artificial Intelligence & Technology Fund (AGIX)... To be clear, the Power Gauge doesn't rate AGIX yet. The ETF launched last July. And our system will rate it once it has traded for a full year. But KraneShares has a uniquely smart approach to how it weighs stocks in the fund. It uses a proprietary AI exposure score that ranks the AI relevance and AI readiness within technology stocks generally. And AGIX is unique in that it recently made an investment in Anthropic, the red-hot private company that competes with OpenAI's ChatGPT. With the Anthropic investment, KraneShares is putting money to work alongside some big tech names like Amazon and Salesforce. AI absolutely has the potential to change the world. But along with the reward, there will be risks. And while the tech titans lead the way... remember, it's your bottom line that matters the most. Good investing, Joe Austin Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 +0.55% 6 20 4 S&P 500 +0.56% 41 352 105 Nasdaq +0.74% 9 78 13 Small Caps +0.33% 198 1191 511 Bonds -0.32% Utilities +1.86% 4 24 3 — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks have become Bearish. Major indexes are mixed. *  *  *  * Sector Tracker Sector movement over the last 5 days Health Care +0.24% Staples -0.26% Materials -1.06% Industrials -1.53% Real Estate -1.58% Communication -1.68% Utilities -2.44% Information Technology -3.1% Energy -3.92% Discretionary -4.76% Financial -5.86% *  *  *  * Industry Focus Health Care Equipment Services 4 40 19 Over the past 6 months, the Health Care Equipment subsector (XHE) has underperformed the S&P 500 by -7.11%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #13 of 21 subsectors and has moved down 1 slot over the past week. Indicative Stocks AORT Artivion, Inc. XRAY DENTSPLY SIRONA Inc. ITGR Integer Holdings Cor *  *  *  * Top Movers Gainers AVGO +8.64% SWKS +8.49% WBA +7.45% DG +7.35% FSLR +6.1% Losers HPE -11.97% COO -6.57% COST -6.07% VMC -6.07% LLY -4.73% *  *  *  * Earnings Report Earnings Surprises No significant Earnings Surprises in the Russell 3000. *  *  *  * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here. You're receiving this e-mail at STEVENMAGALLANES520.NIMS@BLOGGER.COM. For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized financial advice. © 2025 Chaikin Analytics, LLC. All rights reserved. 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