AI earnings season has begun, and the market is no longer accepting spending promises at face value.

In this update, Garry Davis examines what Google’s result and the market response are signalling about hyperscaler capital expenditure, free cash flow and the changing leadership across US markets.

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The first major hyperscaler result has reinforced what the charts were already showing: AI and technology leadership is weakening, while money is rotating into other parts of the market. That does not invalidate the long-term AI opportunity, but it does make price, timing and stock selection far more important.

Garry also looks at the improving relative strength in healthcare, financials, industrials and energy, the resilience of smaller companies, and the early signs that gold and silver may be forming a base after a substantial pullback.

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Key message

A buy-the-dip opportunity in AI will come, but the current evidence does not yet favour assuming that every decline is an immediate entry point. The long-term theme can remain intact while the short-term reward for risk deteriorates. Follow the money flows, reassess weightings and look more widely for strong businesses where downside appears more limited and upside is building.

What you’ll learn

• Why the market is questioning whether hyperscaler spending can produce an acceptable financial return
• What falling forward free cash flow means for the bullish and bearish AI cases
• Why technology and semiconductors are losing relative momentum
• Where leadership is emerging as money rotates rather than leaves the market
• Why a gold and silver basing pattern may be forming, without confirming an immediate reversal
• Why stock selection and entry timing matter more as broad market leadership narrows

Any advice in this video is general advice only. Neither your personal objectives, financial situation or needs have been taken into consideration. Accordingly, you should consider how appropriate the advice, if any, is to those objectives, financial situation and needs, before acting on the advice. Garry Davis (AR No:317590) is an authorised representative of Primary Securities Ltd (AFSL No. 224107).

Note to traders* The publishers of this material wish to disclose that they may hold stocks mentioned in their portfolios and that any decision to purchase those stocks should be made only after the purchaser has made their own enquiries as to the validity of any information in this material.

Past performance should not be taken as an indicator of future returns.

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