Latest / The SPY Trader / From Chips to Code: Navigating the AI Software Pivot

Transcript

From Chips to Code: Navigating the AI Software Pivot · The SPY Trader

• 0:00
  Hello everyone and welcome back to another episode of Spy Trader , the show that helps you navigate the market waves with a little bit of sunshine .
• 0:08
  I am your host , Penny Profitt , and it is 2:30 pm on Wednesday , July 22nd , 2026 , here in the Pacific .
• 0:17
  We are checking in once again to see how the financial world is shaping up as we settle into this latecycle expansion .
• 0:24
  The big story today continues to be the fallout from yesterday's Federal Reserve meeting .
• 0:30
  The Fed decided to hold interest rates right where they are , between 4.00 and 4.25 percent .
• 0:37
  It looks like the era of aggressive rate hikes is officially in the rearview mirror as the Fed moves from fighting inflation to maintaining growth .
• 0:46
  Speaking of inflation , it has stabilized at 2.3 percent , and while that is a tiny bit above the target , the market seems to love the pragmatic approach the Fed is taking .
• 0:58
  The S&P 500 , which we track through the SPY and VOO ETFs , is hovering near alltime highs of 6,150 .
• 1:08
  Another great sign for the economy is that the yield curve has finally uninverted and normalized , which is a breath of fresh air for the banking sector and the Financial Select Sector SPDR Fund , also known as XLF .
• 1:22
  In technology news , we are seeing a fascinating shift .
• 1:26
  While NVIDIA continues to be a powerhouse with its Rubin architecture chips , the hardware hype is cooling off just a bit .
• 1:34
  Investors are now looking at the companies actually using that hardware to make money .
• 1:38
  Microsoft and ServiceNow both reported Q2 earnings yesterday showing a huge 25 percent jump in AI subscription revenue .
• 1:47
  This proves that the massive investment in GPUs over the last couple of years is finally starting to pay off in software profits .
• 1:56
  Meanwhile , Apple is seeing a nice little bump today on rumors that they will announce their affordable Vision Air glasses next month .
• 2:04
  Healthcare is actually our topperforming sector this month .
• 2:07
  Eli Lilly and Novo Nordisk have announced successful trials for oralonly weightloss pills , which has sent the Health Care Select Sector SPDR Fund , or XLV , on a real rally .
• 2:20
  We are also seeing a major pivot in energy .
• 2:23
  Companies like Constellation Energy and Vistra are surging because data centers need so much power that nuclear energy is becoming the new AI infrastructure play .
• 2:34
  Even Tesla is making waves today with its Robotaxi fleet hitting 50,000 active units , though the stock is staying volatile as regulators look at safety .
• 2:44
  So , what should you do with your money right now ?
• 2:48
  First , I am recommending an aggressive rotation from hardware to AI software .
• 2:54
  If you have been riding the wave with NVIDIA , it might be time to trim about 10 percent and move that into Microsoft or the Technology Select Sector SPDR Fund , XLK .
• 3:05
  The pick and shovel phase is maturing , and the application phase is where the new growth lives .
• 3:11
  Second , for a more moderate move , consider the Financial Select Sector SPDR Fund , XLF .
• 3:19
  With the yield curve normalizing , banks like JPMorgan Chase and Goldman Sachs are positioned for a record year of mergers and acquisitions .
• 3:28
  Increasing your weight in XLF to 15 percent could be a smart move .
• 3:33
  For those of you looking for a more conservative or defensive growth play , look at the Vanguard Health Care ETF , VHT , or Eli Lilly specifically .
• 3:45
  The demographic shift of an aging population combined with these new metabolic drugs makes healthcare a growth sector you do not want to miss .
• 3:53
  Finally , for stable income , the iShares 20 plus Year Treasury Bond ETF , TLT , is offering a reliable 4 percent yield now that the Fed has stopped hiking rates .
• 4:07
  While the market outlook is positive , remember that the S&P 500 has a high pricetoearnings ratio right now , so being picky with your stocks is more important than just buying the whole index .
• 4:19
  Look for companies with real AI cash flow like Microsoft and structural tailwinds like Eli Lilly .
• 4:26
  That is all for this update !
• 4:28
  I will be back in a few hours with more .
• 4:31
  Until then , keep those portfolios green !