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World of Software > News > Stellar Earnings as AI Investment Accelerates
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Stellar Earnings as AI Investment Accelerates

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Last updated: 2025/08/01 at 1:53 AM
News Room Published 1 August 2025
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PCE inflation heats up… META and MSFT earnings come in strong… is a trade deal with China coming?… get ready for job losses… how to invest today… “Sell This, Buy That” with Eric Fry

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The market is digesting three big headlines today.

First, the June Personal Consumption Expenditures (PCE) price index – the Fed’s favorite inflation gauge – posted its biggest increase in four months.

Headline PCE climbed 0.3% for the month, more than the upwardly revised May figure of 0.2%. Meanwhile, the annual rate clocked in at 2.6% after rising 2.4% in May.

Core PCE, which strips out volatile food and energy prices, also rose 0.3% in June. This was higher than May’s 0.2% increase. The yearly climb of 2.8% was flat, but that’s because the latest revisions showed a larger increase in May than first reported.

While these increases aren’t enormous, they don’t support the case for a rate cut. And, in fact, the CME Group’s FedWatch Tool shows that the odds of a September cut continue to fall.

Yesterday, as we reported in the Digest, the odds of a September cut cratered after Fed Chair Powell’s hawkish press conference. Today, following this PCE report, they’ve dropped again – from 47.7% to 39.2%. It wasn’t long ago that a September cut was seen as a lock.

But in the morning session, markets didn’t care, which dovetails into our two other headlines…

Treasury Secretary Scott Bessent said that the U.S. and China are nearly at the finish line of a trade deal

From Bessent:

I believe that we have the makings of a deal.

There’s still a few technical details to be worked out on the Chinese side between us. I’m confident that it will be done, but it’s not 100% done.

As I write, there are no details, but finalizing an agreement with China carries huge psychological weight. So, markets applauded this morning.

Meanwhile, earlier today, President Trump said he would not raise tariffs on Mexico beyond current levels for another 90 days.

Here’s more from CNBC:

The new rate for Mexico was set to take effect Friday, when Trump’s paused “reciprocal” tariffs on dozens of countries are set to snap back into place.

But Trump said Thursday morning that he would postpone any tariff changes, as a result of his “very successful” call with Mexican President Claudia Sheinbaum.

But what really goosed stocks this morning was last night’s earnings from Meta and Microsoft

As I write Thursday, META is up 12% and MSFT is up 5% after both companies reported better-than-expected earnings yesterday after market close.

While the earnings and revenue figures were impressive, the big story is how much these giants are sinking into AI.

Here’s CNBC:

Both Meta and Microsoft have been investing heavily in artificial intelligence infrastructure in recent years, and the companies said they expect to continue to shell out billions in capital expenditures.

Meta said capital expenditures will range between $66 billion and $72 billion for the full year, raising the low end of the company’s previous estimate of between $64 billion and $72 billion.

Microsoft sees over $30 billion in fiscal first quarter capital expenditures and assets acquired through finance leases, while analysts surveyed by Visible Alpha had expected $24.23 billion.

Despite massive capital expenditures, margins are holding up – and that’s a bullish signal. These tech giants are managing to invest heavily in the future without sacrificing current profitability.

Bottom line: For now, AI appears to be paying for itself, and Wall Street couldn’t be happier. These results reinforce the narrative that AI isn’t just hype, it’s already driving real results.

But there’s a dark side to this AI explosion that’s building today…

AI could eliminate 20–30 million U.S. jobs by 2035: a level of disruption that may break the economic flywheel if left unaddressed.

So says our technology expert Luke Lango.

On Tuesday, Luke dove into a topic we’ve featured regularly here in the Digest: the potential for unprecedented labor force disruption due to AI – and what to do about it.

Today, automation keeps advancing, becoming faster, cheaper, and more widespread. Meanwhile, the latest AI models, including voice-native, multi-modal agents, are now replacing not just repetitive tasks but also an increasing share of white-collar cognitive work.

Here’s Luke with some sobering facts about what this means for your job:

According to research from OpenAI, McKinsey, Goldman Sachs, and others, the jobs most exposed fall into three categories.

High-Risk (50–100% automatable in 10 years):

  • Administrative support: 8 million jobs → ~6M at risk
  • Customer service & call centers: 4M → ~3.5M at risk
  • Fast food & self-checkout: 5M → ~3M at risk
  • Transportation (drivers, dispatch): 4M → ~2M at risk

That’s already ~15 million jobs gone…

Medium-Risk (20–50% automatable):

  • Retail, finance, legal services, manufacturing, education → another 8- to 12 million plausibly displaced

Low-Risk (hard to replace):

  • Healthcare, skilled trades, construction → minimal short-term impact and marginal job loss

Total likely jobs displaced by 2035: 20- to 30 million

For context, data from the Bureau of Labor Statistics shows that current total U.S. payroll employment measures around160 million jobs.

So, we’re looking at upwards of almost 20% of jobs replaced by technology.

“Jeff, you and Luke are fearmongering – history shows that while new technologies kill some jobs, they create new ones – we’ll be fine.”

Yes, historically, technology created new jobs in the wake of the old ones it rendered obsolete.

A great example is the ATM. As a quick reminder, in the 1980s, banking employees found themselves facing the existential threat of the rapid expansion of ATMs across the nation. The fear was that these machines would put employees out of work.

Instead, branches were suddenly cheaper to operate. Banks – wanting to increase profits by servicing new neighborhoods – were now incentivized to open additional branches with ATMs thanks to the favorable economics.

This resulted in more bank employees hired overall, even though there were fewer employees needed per location.

But there’s a key difference this time…

We’ve never had a technology that can potentially replace nearly all human tasks.

Sticking with our bank example, think about the roles that AI/robotics can fill, rendering a human workforce unnecessary.

Here are a few examples off the top of my head…

  • Tellers: Cash deposits, withdrawals, check scanning, and account updates are already handled by smart ATMs and mobile apps
  • Customer Service Reps: AI-powered chatbots and voice assistants can resolve issues 24/7
  • Loan Officers: AI can evaluate creditworthiness in seconds, factoring in more variables than a human ever could
  • Financial Advisors: Robo-advisors now offer personalized investment strategies at a fraction of the cost, with constant rebalancing and tax optimization
  • Compliance Officers: AI systems monitor transactions in real-time, flagging anomalies way more efficiently than manual teams
  • Fraud Detection Teams: Machine learning models detect suspicious patterns instantly, catching fraud faster than humans.

Frankly, there’s really just one job that’s safe in this scenario…

The construction crew that built the new bank locations.

If you think I’m behind hyperbolic, let’s go to three individuals on the cutting edge of AI…

Anthropic CEO Dario Amodei, Google’s Demis Hassabis, and the “godfather” of AI, former Googler, Geoffrey Hinton.

A MarketWatch article earlier this week highlighted how they’re viewing AI’s impact on the world today.

Hassabis is the most optimistic… Amodei is the most pessimistic as to the economic consequences… and Hinton sees robots as a threat not only to jobs, but also humanity.

One thing they agree on is that you should take steps to safeguard your job now.

From MarketWatch:

Hassabis (The boom):

  • Learn to manage AI like a conductor manages an orchestra
  • Position yourself at the intersection of AI and human needs

Hinton (The bust):

  • Build that 18-month emergency fund right now
  • Shift toward AI-proof roles — like fixing HVAC systems

Amodei (The ticking clock):

  • You’ve got 18 months, not 18 years
  • Launch that side gig yesterday

All good advice, but they forgot one…

Align your portfolio with AI.

I’ve been beating this horse well beyond death for a long time, urging readers to recognize what’s coming.

One of the best (and potentially, only) economically protective steps we can take today is to align our wealth with the AI companies that will benefit from the transition to a robotic workforce.

So, how do we do that?

What Luke is buying today

From Luke:

You must invest in the AI economy.

And not just any stocks – not “tech” broadly or the old software companies pretending to be AI. You need to own the platforms, infrastructure, and picks and shovels behind the AI revolution.

Those are the companies that will capture the productivity gains, own the intellectual property, rent out the models, provide the chips, lease the robots, and keep compounding – regardless of whether 30 million jobs vanish or not.

We’re talking:

  • Foundational AI companies: Think Nvidia (NVDA), AMD (AMD), Broadcom (AVGO), and Marvell (MRVL)
  • Applied AI and robotics firms:Tesla (TSLA), Palantir (PLTR), UiPath (PATH), and Symbotic (SYM)
  • AI infrastructure plays: Arista Networks (ANET), MP Materials (MP), Constellation (CEG), Cisco (CSCO), Oracle (ORCL), and more

These companies are likely to be the only ones compounding real earnings while the rest of the market flails.

(Disclaimer: I own AMD and SYM.)

These are just a handful of the stocks that Luke is directing his Innovation Investor readers into. To join him in the service to see the entire list, click here.

But be careful – not every “AI” stock is a buy

Our macro expert Eric Fry is urging investors to be deliberate about their AI picks today.

Not every company flashing “AI” will be a long-term winner. So, separating hype from substance is critical – especially at some of today’s valuations.

Eric just put out a “Sell This, Buy That” research package that urges investors to sell four market darlings. I got his permission to reveal three of them: Amazon, Tesla, and Nvidia.

In Eric’s report, he reveals what he’s buying instead. There’s significant overlap with our AI/robotics theme today.

Here’s more from Eric:

I’ve compiled a list of three companies that I believe are “Buys.” These are under-the-radar, early opportunities that can help you protect and multiply your money during make-or-break markets.

You can find the details of these companies – ticker symbols and all – in my brand-new special broadcast, free of charge.

Coming full circle…

Eric is correct in that we must be judicious about which AI stocks we buy today. But equally important is that we do not miss the big picture…

A world inundated by AI is hurtling toward us – with massive implications for your job, income, and wealth.

Here’s your reminder to make sure you’re prepared.

Have a good evening,

Jeff Remsburg

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