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Transcript

Record Highs and the AI Arms Race · The SPY Trader

• 0:00
  Hello and welcome back to the Spy Trader podcast !
• 0:03
  I am your host , Sunny Sideup , and it is currently 2:30 pm on Wednesday , May 27th , 2026 , here on the Pacific coast .
• 0:13
  We are right in the thick of the afternoon session , and boy , do we have some fascinating movements to talk about today .
• 0:20
  If you have been looking at your screens lately , you might feel like you are watching a highstakes tugofwar .
• 0:26
  On one side , we have incredible growth in the technology sector that is pushing our indices to dizzying new heights , but on the other side , we are feeling the squeeze of persistent energy costs and some very sticky inflation data .
• 0:41
  Let’s dive into the numbers .
• 0:43
  The S&P 500 , which we track through the SPY , is currently trading near a fresh record high of 7,519 .
• 0:53
  We have seen an eightweek winning streak , though things are feeling a little bit tepid today as the market tries to digest all those gains .
• 1:01
  Meanwhile , the Nasdaq Composite , or the QQQ , hit a record closing high of 26,656 just yesterday .
• 1:11
  This is being driven by what I can only call a parabolic demand for AI infrastructure .
• 1:17
  And let’s not forget the Dow Jones Industrial Average , the DIA , which recently broke the 50,000 milestone and hit a new record of 50,674 today as investors rotate into those reliable industrial bluechip stocks .
• 1:34
  The big news on the macro front is the transition at the Federal Reserve .
• 1:39
  Just a few days ago on May 22nd , Kevin Warsh was sworn in as the new Fed Chair .
• 1:46
  He is inheriting a tough environment with rates between 3.5 and 3.75 percent .
• 1:52
  With Core PCE reaccelerating to 4.3 percent , there is a lot of chatter about whether the Fed will have to hike rates further .
• 2:01
  In the energy sector , we are seeing some relief .
• 2:05
  Crude oil has dropped below 90 dollars a barrel because there are reports that the Strait of Hormuz might see traffic restored within a month , which is cooling off the massive 30 percent rally we saw in energy stocks earlier this year .
• 2:20
  Looking at individual companies , Nvidia is still the talk of the town .
• 2:24
  They reported a blockbuster first quarter with 81.6 billion dollars in revenue .
• 2:30
  That is triple the profit from a year ago !
• 2:33
  They even announced a 25fold dividend increase .
• 2:37
  On the other hand , Microsoft has been a bit of a laggard , trading about 9 percent lower than it was a year ago .
• 2:43
  We are also seeing Snowflake jump 25 percent this week after a huge 6 billion dollar deal with Amazon to use their new Graviton AI chips .
• 2:53
  Oh , and keep your eyes peeled for SpaceX ; they just filed for a confidential IPO that could be the largest in history .
• 3:02
  So , what should we be doing with our money in this environment ?
• 3:05
  For a core holding , I recommend looking at the Vanguard S&P 500 ETF , ticker VOO .
• 3:13
  While tech is leading , the other 493 companies in the index are finally showing doubledigit earnings growth , so broad exposure is a great way to capture that recovery while protecting yourself if the AI bubble hits a snag .
• 3:29
  If you are looking for growth , the Technology Select Sector SPDR Fund , or XLK , is the place to be .
• 3:36
  Even with high valuations , big tech is projected to spend 725 billion dollars on capital expenditures this year .
• 3:45
  This AI arms race is a structural shift , not just hype .
• 3:49
  Now , if you like a bargain , take a look at Microsoft , ticker MSFT .
• 3:55
  It has underperformed compared to its peers , but it is still dominant in enterprise cloud and 365 services .
• 4:02
  It is essentially a bestinclass company that is currently on sale .
• 4:06
  For those who want to play it safe , I suggest a defensive rotation into the Health Care Select Sector SPDR Fund , ticker XLV .
• 4:14
  With the Fed possibly moving back toward rate hikes , healthcare provides a defensive moat and stable earnings .
• 4:21
  Finally , a word of caution on bonds .
• 4:25
  If you are looking at the iShares 20 plus Year Treasury Bond ETF , ticker TLT , be careful .
• 4:32
  With inflation still high , bond prices are still very vulnerable to further rate hikes .
• 4:37
  That is the update for now !
• 4:39
  Keep your head clear and your portfolio balanced .
• 4:42
  I am Sunny Sideup , and this has been Spy Trader .
• 4:46
  I will see you back here in a few hours for the market close !