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Your Strategic Monday Round - Up

The Datacenter Strikes Back: Revenge of the Racks

Author

Linda AGI
May 05, 2025 • Estimated Reading Time: 3 minutes

🌟 Editor's Note
This week’s focus is The Return of the Datacenter, with AI capex surging and semiconductors rebounding. Markets remain caught between soft vs. hard data, political rhetoric, and AI optimism vs. policy risks.

Linda AGI stays tactically long in quality AI/semis, mispriced small-cap insurers, value healthcare, and agentic commerce. We’re preparing for a potential May pullback driven by liquidity and trade tensions.

The Situation

Data Divergence

  • Hard data: Jobs, card spend, nonfarm payrolls are firm.

  • Soft data: Recession fears growing, with future expectations at 2008 levels.
    Linda’s View: U.S. consumers are front-running pain, boosting short-term earnings but unsustainable long-term.

CapEx Reality

  • Tech giants’ CapEx remains modest, despite political promises.

  • Real winners: AI datacenter builders (NVDA, AVGO, SMCI).

Trade Policy & Global Realignment

  • Tariffs are a tax on consumers, with some companies (e.g., 3M) reporting losses.

  • China’s progress in semiconductor tech threatens the U.S. firewall.

Market Dynamics

The Datacenter Surge

  • Stocks to Watch: NVDA, AVGO, SMCI, MRVL.

  • Linda’s Playbook: Own the “Mag 4” infrastructure stocks.

Agentic Commerce

  • Visa (V), Meta (META), and PayPal (PYPL) are integrating AI into commerce.
    Theme: The rise of agentic commerce will redefine fintech. We're focusing on payment rails + AI convergence.

📉 Positioning & Market Behavior

  • Hedge funds are net neutral but gross long, triggering short squeezes.

  • Linda’s View: We expect a short-term pullback this week, but remain positive for June/July.

🪙 Crypto Setup

  • BTC: In a "stealth bull market," supported by treasury allocations and policy shifts.
    Linda’s View: We remain bullish on crypto with a 12-month horizon.

Where We Are Investing

Theme

Tickers

Why

AI Infrastructure

NVDA, AVGO, SMCI, MRVL

Key datacenter players

Agentic Commerce

V, MA, PYPL, META

Payment + AI convergence

Small-Cap Quality

RNR

Buffett-style ROE

Defensive Healthcare

MDT, DVA

Undervalued, solid dividends

Crypto

COIN, RIOT

Risk-on play, treasury flows

Avoid

NKE, ONON

Brand erosion risk

Sector Focus

Healthcare

  • Stocks to Like: Medtronic (MDT), DaVita (DVA) – undervalued, strong yields.

Small-Cap Insurance

  • Renaissance Re (RNR): 9% buyback yield, strong growth.
    Exit Trigger: <$232.

🌍 Global Risks & China’s AI Pivot

  • China’s Tech Leap: EUV breakthroughs threaten U.S. dominance. Watchlist: ASML, SMIC.

  • Direct-to-Consumer Disruption: AliExpress clones U.S. brands, eroding margins.

Closing Thoughts Linda AGI

Markets are shifting technically and geopolitically. We’re focused on dislocation opportunities and quality assets. The rally could continue into summer, but the next dip may be a buying opportunity.

Our Stance:

  • Be long quality, especially AI infrastructure.

  • Be nimble, especially with policy events.

  • Be skeptical of political narratives without real capital flows.

Stay smart,
— John & Daniela

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