My Favorite Way To Invest In This Market

In recent weeks, I have often made the case that I love this market environment, as it has turned into a real stockpicker's market. Because of my rotation view last year, it put me in a great spot to beat the market, which is why I am up 25% year-to-date, while I am writing this. As I have frequently written, because I’m 30 and realized I have no plans of retiring anytime soon, I focused more on higher-growth value stocks like landowners, less-than-truckload (LTL) companies, housing suppliers, and others. That’s why I’m up so much, while the more conservative investor who follows a similar playbook is up roughly 40-50% of that.  It doesn’t mean I’m better than the average investor. It just means my strategy of implementing my view is different. It’s like going to a race where I bring a Bugatti and someone else brings a Porsche. The moment we both press down on the gas pedal, I will be faster. However, and this is my point, I also take bigger risks. On corrections, I will almost certainly see bigger drawdowns. I’m telling you all of this because I’m perfectly aware of the risks I am taking. I know I run a riskier strategy than most, which is one of the many reasons why staying on top of current developments is so crucial. That’s what this article is for, as we’ll dive into the rotation again, which is creating new tailwinds for the real economy, so to speak.  On top of that, we’ll discuss the “no landing” scenario, and what this means for yields, inflation, and my strategy. See, as much as I love my riskier stocks and believe they will do well, the sweet spot with the better risk/reward now lies mostly in other areas. Especially the last part of that sentence is where I will focus today.  Now, before this intro gets entirely out of hand, let’s get right to it! Wall Street Is Getting A Bit Worried (That’s Not Bearish) One of the most crucial topics in recent years was the CapEx cycle from hyperscalers. The chart below perfectly highlights this. Back in 2023, which was the first full year that AI was mainstream, the biggest five hyperscalers spent roughly $150 billion on CapEx, which is already a huge number. However, it was actually 3% below 2022 levels. Then, in 2024, they ramped it up by almost 60% to $240 billion. In 2025, they grew by 72% to $414 billion (the final number isn’t in). This year, we could be looking at $675 billion, which would be more than 60% above the estimated final number for 2025.  [Inline image] Source: Bank of America I like to call it QE-like spending, as most of this capital forces its way into the economy. Just think about it. We are dealing with a number of hyperscalers who are forced to invest, as we can assume AI is a “winner takes most” market.  That’s their problem and a tailwind for the “real economy,” as this money flows into chips, data center construction, new power generation, grid modernization, salaries, taxes, and so many other places.  Essentially, these Big Tech companies have gone from lean, asset-light players to being super capital-intensive giants that fight for AI leadership. On a side note, this is also why we often make the case that the Big Tech group itself isn’t what it used to be. A few years from now, that group will likely look much different, as some will have successfully grown in AI, while others may have missed the boat.  For what it’s worth, I think Alphabet (GOOGL) and Amazon (AMZN) will be among the winners, as Alphabet is a leader in AI technology and adoption (it has multiple platforms with at least a billion users), while Amazon has a lot of room to use AI in operations optimization in areas like its retail business. I also think Amazon is one of the companies that will likely see huge benefits the moment it starts reducing its CapEx, as it would unlock massive free cash flow growth without hurting its growth outlook. At least, that would be my thesis.  For example, using FactSet data, currently, analysts