After this week’s Fed meeting, one thing is clear: Jerome Powell is not going to recklessly promise a cascade of rate cuts. And that’s a good thing. The Fed chair cut rates by 0.25% – the first cut in many months – and emphasized it was a “risk-management cut,” not the start of an unabated easing binge.
In other words, Powell isn’t “marrying” himself to a multi-year rate-cutting regime just to appease Wall Street’s craving for cheap money. (Let’s face it: Wall Street would love nothing more than free-flowing liquidity forever – liquidity is basically Wall Street’s drug of choice.) But the Fed has to stay data-dependent. Who knows what the economy will look like in 12 or 24 months? Powell wisely refuses to make blind promises. But if the data keep trending the way they have been, more easing is likely on the menu.
Think about the trends: Inflation is coming down from its peak, and the labor market – while still solid – is showing hints of cooling. In fact, a new wave of AI-driven job automation is quietly adding slack to the employment picture, which could push unemployment higher in coming quarters.
If inflation stays tame and unemployment inches up, the Fed will find plenty of room to cut rates further on a “meeting-by-meeting” basis. That means we could see four to six more quarter-point cuts over the next 12 months – a significant tailwind for stocks.
Why? Because easier money greases the wheels of the market. Lower rates reduce bond yields and make stocks more attractive by comparison. They also decrease the discount rate on future earnings, which disproportionately boosts growth stocks and speculative investments.
Bottom line: Powell’s pragmatic approach cleared the uncertainty. The Fed is easing off the brake, gradually and conditionally – and that’s enough to keep the bulls running. With the specter of “higher for longer” interest rates fading, the next phase of the tech stock boom may be beginning right now.
Watch our latest Being Exponential With Luke Lango to learn more:
Opendoor: A Housing Tech Comeback, Supercharged by Cuts
Few stocks exemplify the post-Fed opportunity better than Opendoor Technologies (OPEN), the one-time poster child of iBuying that’s staging a jaw-dropping comeback.
Just a year ago, Opendoor looked almost dead in the water – the stock had cratered from its SPAC heights down to mere pennies (it bottomed around $0.50!). The housing market was frozen by 7%-plus mortgage rates, and Opendoor’s tech-driven home-flipping model was bleeding cash.
What a difference a year – and a Fed pivot – can make. With the Fed now cutting rates and mortgage costs finally ebbing, Opendoor’s world is turning right-side up.
OPEN stock has skyrocketed from the brink (under $1) to over $10 in recent weeks. Part of that surge is due to a passionate community of retail investors (the “Opendoor army”) who started buying in when the company ousted its CEO and signaled big changes. But now there are real fundamentals improving, too.
Opendoor has installed a new CEO, Karim Atiyeh (formerly a top executive at Shopify), who is aggressively refocusing the business. His playbook: bring in AI, slash costs, and harness the power of Opendoor’s data at scale.
Atiyeh was instrumental in Shopify’s (SHOP) successful pivot to AI-driven tools, and he’s wasting no time doing the same at Opendoor. The company is exploring AI for better pricing models and more efficient home operations. It’s also reportedly considering cutting its workforce from 1,400 employees down to a lean 200 – an extreme belt-tightening to drastically improve profit margins.
Now, with the Fed-induced drop in mortgage rates, Opendoor’s core business of buying and selling homes could hit the gas. When borrowing costs fall and homebuyers regain confidence, housing activity picks up – more people list homes and more people buy.
Of course, execution risk remains. Opendoor is essentially attempting to reinvent itself on the fly, which is never easy. Cutting ~80% of your staff could backfire if not done carefully. And relying on retail investor hype alone won’t sustain a $10-plus stock price forever – the company eventually needs to show real profits.
But if management delivers on making Opendoor a lean, AI-powered, housing marketplace, the upside is enormous. We’re talking about a stock that could go from $5 to $50 in a successful turnaround scenario.
Tesla: Betting Big on Robots – and Riding the Rate Tailwind
It’s hard to talk about tech booms without mentioning Tesla (TSLA), which often serves as the market’s bellwether for growth exuberance. After a volatile couple of years, Tesla stock is charging higher again – up about 100% in 2023 and accelerating – and the stars are aligning for another potential vertical breakout. Let’s unpack why.
First, there’s the Elon factor. Elon Musk just made a notable insider buy, scooping up roughly $1 billion of Tesla shares with his own money. That’s a strong vote of confidence from the world’s now second-richest man. Musk isn’t buying because of current EV sales or next quarter’s earnings; he’s buying because of what’s coming next: robots.
Specifically, Tesla’s humanoid robot Optimus has become Musk’s new obsession – and possibly Tesla’s next multi-trillion-dollar business. Musk himself has stated that Optimus “will be the overwhelming majority of Tesla’s value… with the potential to generate over $10 trillion in revenue.” In other words, he believes Tesla’s AI-powered robot could be bigger than the entire car industry. That’s a jaw-dropping claim, but Musk has a track record of making wild visions reality (reusable rockets, anyone?).
Tesla is already piloting Optimus robots in its factories and showcasing their abilities (witness videos of Optimus lifting boxes, doing yoga stretches, and even waving hello). Musk has promised that thousands of units will be produced soon, with full-scale commercialization to businesses by as early as next year, and consumer versions in the not-too-distant future.
If 2024–2025 is the period where Tesla transitions from concept to production on humanoid robots, Wall Street’s imagination (and spreadsheets) will have to account for a whole new TAM (total addressable market) in the tens of trillions. We’re essentially talking about Tesla potentially selling intelligent labor in a box – robots that could work in warehouses, retail stores, elder care, you name it. The productivity implications are staggering.
Even before Optimus contributes to the bottom line, the very promise of it can drive Tesla’s valuation to stratospheric levels. And guess what backdrop makes such a moonshot story most likely to take off? A falling interest rate environment. Tesla is the quintessential long-duration asset – investors buy it not for its current 3% profit margin on cars, but for its potential to dominate transportation, energy, and now robotics over the next decade. When rates drop, those future cash flows suddenly look a lot more valuable in present terms. It’s no surprise that as soon as the Fed signaled a friendlier policy, high-growth names like Tesla caught a strong bid.
Buckle up, Tesla investors – the ride could get wild (again).
AI Cloud Crunch: Big Tech’s $6 Billion Scramble for Compute Power
If you want tangible evidence of how frenzied the Artificial Intelligence boom has become – and why it’s creating huge opportunities – look no further than the deals happening in AI cloud infrastructure. The giants of tech are in an arms race to secure as much computing horsepower as possible, and they’re willing to spend mind-boggling sums to do it.
Case in point: Nvidia (NVDA), the premier maker of AI chips, just agreed to a $6.3 billion deal with CoreWeave (CRWV) (a fast-growing AI cloud provider) to purchase any and all of CoreWeave’s excess cloud capacity.
Essentially, Nvidia said: “We’ll take whatever you’ve got – here’s a guaranteed check.” That’s unprecedented. And Microsoft (MSFT) has reportedly struck a similar multi-billion arrangement with a startup out of Norway (named nScale/NewScape) to rent extra GPU servers for its Azure cloud. Even with their own massive data centers, the hyperscalers still can’t get enough AI compute.
What’s driving this cloud crunch? Simply put, demand for AI services is outpacing supply of the hardware by miles. Every company and their cousin now wants to deploy large language models (LLMs), generative AI, and advanced analytics. But training and running those models requires powerful graphics processors (GPUs) and specialized AI chips – and there are only so many to go around.
Nvidia can’t fab chips fast enough, and data center operators can’t install them fast enough. So, we have a classic seller’s market. Firms like CoreWeave and Nebius (NBIS) – a European cloud provider sometimes dubbed the “Ferrari” of AI cloud – are in the sweet spot. They’ve built high-end GPU cloud infrastructure and can effectively auction off capacity to the highest bidders. When Nvidia – the supplier – is itself a buyer of last resort, you know how severe the shortage is.
For investors, this trend highlights a picks-and-shovels strategy for the AI revolution. Sure, you can bet on the software names building AI applications, but many of those are still unprofitable or speculative. Meanwhile, the companies selling the “compute power” underlying the AI boom are booking real revenues and have clear visibility for growth.
The Bottom Line
The Fed’s new dovish tilt could further amplify this dynamic. Building data centers and manufacturing chips are capital-intensive endeavors – lower interest rates reduce the cost of financing these huge expansion projects. If borrowing at 5% was a hurdle, borrowing at 3% makes it easier to greenlight new server farms and chip fabs. Cheaper capital plus insatiable demand = accelerated growth for the AI infrastructure players. We may see an AI investment boom not unlike the broadband/telecom buildout of the late ‘90s (though hopefully with a better outcome!).
This is the “AI bazooka” being aimed at the market. Estimates suggest the major cloud and AI companies will collectively invest hundreds of billions per year in expanding AI capabilities. Even then, it could take five-plus years for supply to catch up with demand. Consider that today perhaps 10–20% of enterprises’ workloads are AI-driven; in a few years it could be 80% or more. Until that equilibrium is reached, companies like CoreWeave and Nebius can practically name their price. High growth, fat margins, and guaranteed contracts – it’s a dream scenario.
For now, CoreWeave is a newly public stock and Nebius is private, so access is limited. But keep an eye on other players in this arena too – established cloud providers (like Oracle (ORCL), which has been pivoting into AI cloud) or chip-makers enabling all this (beyond Nvidia, think Advanced Micro Devices (AMD) or even memory suppliers). The AI gold rush is creating many winners, and thanks to the Fed’s liquidity boost, the funding firepower is there to fuel it.
Naturally, investors should remain selective and vigilant. Not every company will execute well just because capital is cheap. There will be pretenders in the AI space that flame out, and not every EV or robotaxi vision will come to fruition. But the big picture is one of opportunity: the next 12–24 months could unleash a tech-led bull market underpinned by declining rates and accelerating innovation.
Indeed, it’s a thrilling time to be a tech investor. The money is getting cheaper, the innovations are getting bigger, and the market’s appetite for growth is returning. In our view, the Fed’s cautious cut was not a reason to fear – it was a signal to get in gear. The next boom may be just beginning, and those all-in on the right tech trends could find the coming years very rewarding. In short: the exponential age is back on track, fueled by a fresh dose of liquidity. Enjoy the ride, and as always, do your homework… but don’t be afraid to be bold. The future is being built now.
