Weekly Newsletter 01/24/25

Good afternoon and thank you in advance for your time.

Stocks are on track for a second straight week of gains with the S&P 500 recording its first fresh all-time-high since early December. A few dynamics in focus this morning, though market really seems to be looking ahead to next week when ~40% of S&P 500 market cap is scheduled to report, including “Magnificent 7” names Microsoft, Meta (Facebook/Instagram), Apple, Amazon and Tesla. The latest batch of Q4 earnings reports largely underwhelmed, particularly with some lingering headwinds into 2025.

Earlier this week several technology companies announced a joint venture named Stargate. According to parties involved,

“The Stargate Project will be a new company which intends to invest $500 billion over the next four years building new AI infrastructure for OpenAI in the United States. We will begin deploying $100 billion immediately. This infrastructure will secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world.”

The initial equity funders in Stargate are SoftBank, OpenAI, Oracle, and MGX.

Arm, Microsoft, NVIDIA, Oracle, and OpenAI are the key initial technology partners. The buildout is currently underway, starting in Texas, and they plan to evaluate potential sites across the country for more campuses as they finalize definitive agreements. The announcement comes amid high expectations, extended valuations, and some questions around AI capex for the deep pockets of Microsoft, Alphabet, Amazon, Meta. Research commentary from several Wall St firms said the deal is viewed as mostly positive for broader AI universe/secular growth theme, however Stargate is unlikely to dent optimism around the previously mentioned existing large tech goliaths. While Oracle is looking to double capex to ~$14B and AI capex growth expected to slow to single-digits by 2026 from ~20% this year, Oracle's spend is only a sliver of the near-$260B 2025 capex expected from large cap tech.

A recent Fund Manager Survey (FMS) said investors remain positive, or “bullish” in Wall St lingo, though less than the previous survey suggesting maybe some of the post-election frenzy has subsided.

Several notable themes in the press over the long holiday weekend in the US. On the sticky inflation front, bird flu and weather flagged as upside drivers of grocery prices. Policies on tariffs, taxes and immigration expected to push inflation higher, with economists now forecasting CPI up 2.7% y/y in December 2025 vs prior expectations for a 2.3% increase. Bond yield backup a renewed threat for regional banks, with a report highlighting potential for surge in yields to exacerbate commercial real estate and securities losses.

Despite the mentioned headwinds, corporations, the biggest source of demand for US equities, are expected to get more active over the near term. Goldman Sachs noted that corporate buyback window ends today, with ~45% of the S&P market cap to return to the market and estimates $1T worth of corporate demand in 2025, representing the largest year on record for buybacks.

The link below contains additional financial planning resources and articles of interest.

https://www.raymondjames.com/evangelista/resources

“If we continue to develop our technology without wisdom or prudence, our servant may prove to be our executioner.”—General Omar N. Bradley, Armistice Day speech (1948)

Thank you,

Kyle

KYLE CHRISTIANSON, CFP®

Financial Advisor

Raymond James & Associates, Inc.

1421 Pine Ridge Rd, Ste 300

Naples, FL 34109

Toll Free (800) 843-2025 | Direct (239) 513-6525 | Main (239) 513-6500 | Fax (239) 596-5474

Kyle.Christianson@RaymondJames.com

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