Michael Jensen @GenesisGains: "Hello everyone The market continues..."

Denmark

Hello everyone The market continues to push higher, with the $NSDQ100 trading around 30,475 and the $SPX500 near 7,587. Yet beneath the surface, an important shift may be starting to emerge. For years, one of the biggest drivers of equity performance was corporate buybacks. Companies reduced share counts, boosted earnings per share, and helped support valuations. The AI race, however, could gradually push the market in the opposite direction. Building AI infrastructure is proving enormously expensive. Data centers, chips, power generation, networking equipment, and software development require capital on a scale rarely seen outside major industrial revolutions. With financing costs remaining elevated, companies are increasingly searching for new ways to fund these investments. That creates a new dynamic: more capital raising and potentially more shares entering the market. Investors have become accustomed to buybacks reducing supply. Future AI spending cycles could instead lead to greater equity issuance as companies seek fresh capital to fund ambitious projects. The key question remains simple: where is the return on all this spending? Unlike the early internet era, today's AI landscape is highly competitive. Multiple US companies are investing aggressively while international competitors continue to narrow technology gaps. AI is undoubtedly transformative, but transformative technologies and profitable investments are not always the same thing. History offers plenty of examples. Railroads changed the world. The internet changed the world. Yet many early investors still lost money because expectations ran far ahead of eventual profits. This matters because AI-related capital expenditures continue to accelerate. Markets remain willing to fund enormous spending programs because investors believe future productivity gains will justify today's costs. Eventually, however, shareholders will want more than promises. They will want measurable returns. Meanwhile, market sentiment remains exceptionally strong. Semiconductor stocks continue to lead the rally, with names such as $MU (Micron Technology, Inc.) and $MRVL (Marvell Technology Group Ltd) posting remarkable gains since the spring lows. Software has also joined the advance, with companies like $PANW (Palo Alto Networks) benefiting from the broader AI and enterprise spending story. Interestingly, the biggest winners may ultimately be the companies using AI rather than the companies building it. Early corporate surveys suggest businesses are already seeing efficiency gains and cost reductions, while many infrastructure providers are still working to prove that the massive capital being deployed can generate attractive long-term returns. On the macro side, investors continue monitoring Middle East developments primarily through the lens of energy prices and inflation. So far, markets have remained remarkably resilient despite geopolitical uncertainty. As long as oil prices stay contained, traders appear willing to focus on earnings, AI, and economic resilience rather than geopolitical headlines. For now, momentum remains firmly with the bulls. The Nasdaq has added more than 7,700 points since the March lows, and enthusiasm surrounding AI remains powerful. But after such a strong advance, the market is slowly transitioning from a story about potential to a story about profitability. And those are two very different things.

Not investment advice. The author may have financial interests in the mentioned instruments.