Long-term pickers, I hope you had a wonderful New Year's holiday. And now it's time to get back to our work 😉 Below are the first notes of the year.
By the way, since the inception of the Long-Term Pick Portfolio (January 2022), it has produced 15.14% annualized returns beating the S&P 500 presented by the SPY ETF (9.22%). In case you're interested in getting all the transactions and understanding why some companies are bought or sold, consider becoming a patron on Patreon. Use the promo code 2025 to get 60% off the first month of your subscription! The code is valid until the end of January.
Content:
🤖 Microsoft's AI Race
⚡ Data Centers’ Energy Appetite
🖥️ US vs China: Servers Installed
💾 IT Sector Set to Dominate 2025
👜 Consumer Mood Hits 5-Year High
😳 10 Stocks Now Drive the Market
⛏️ Uranium Mining Comes Back To Texas
🧑🤝🧑 Importance Of Population
🤖 Microsoft's AI Race
Microsoft is spending heavily on Nvidia's Hopper GPUs, including the H100, to dominate the AI race. In 2024, the company bought 485,000 GPUs, twice as many as ByteDance, the next highest buyer. These chips are essential for training large AI models, powering data centers, and running advanced AI applications. Microsoft's aggressive investment highlights its strategy to lead in cloud computing and AI innovation.
Additionally, Microsoft’s competitors, like Google, Amazon, and Tesla, are also increasing their AI investments, which might escalate the race for AI dominance in the coming years.
Stocks and ETFs to watch: MSFT (Microsoft), NVDA (Nvidia), SMH (VanEck Semiconductor ETF), SOXX (iShares Semiconductor ETF).
⚡ Data Centers’ Energy Appetite
Data centers are becoming major energy consumers in the U.S. By 2030, they could consume between 4.6% and 9.1% of the country’s electricity, up from around 4% today. This growth is due to larger data centers (up to 1000 MW) and the rising demand for AI and cloud computing. States with cheap electricity and strong infrastructure, like Georgia, are leading the way.
Stocks and ETFs to watch: AMZN (Amazon Web Services), MSFT (Microsoft Azure), GOOGL (Google Cloud), ICLN (iShares Global Clean Energy ETF), NEE (NextEra Energy).
🖥️ US vs China: Servers Installed
The U.S. and China lead the world in server installations. Together, these two countries dominate the global compute infrastructure, with the U.S. almost twice ahead in total server capacity. This dominance reflects their leadership in technology, AI, and cloud computing. Other regions are far behind in installed computing bases, highlighting the gap in digital infrastructure globally.
Stocks and ETFs to watch: SKYY (First Trust Cloud Computing ETF), WCLD (WisdomTree Cloud Computing Fund), CLOU (Global X Cloud Computing ETF), BABA (Alibaba Cloud), SMH (VanEck Semiconductor ETF), SOXX (iShares Semiconductor ETF).
💾 IT Sector Set to Dominate 2025
IT companies are expected to make more money from each sale in 2025, with profit margins growing by 2.2%. This is the highest increase among all sectors, showing that tech companies are getting better at making money from their business. Materials and Consumer Services should also be doing well, while Real Estate is the only sector expected to have a decline.
Stocks and ETFs to watch: QQQ (Nasdaq-100 ETF), VGT (Vanguard Information Technology ETF).
👜 Consumer Mood Hits 5-Year High
Americans are feeling the most positive about the economy since 2019. This big jump in consumer confidence is important because when people feel good about the economy, they tend to spend more money. The trend shows a strong recovery from the lows of 2022-2023.
Stocks and ETFs to watch: XLY (Consumer Discretionary Select Sector SPDR Fund), VCR (Vanguard Consumer Discretionary ETF), AMZN (Amazon).
😳 10 Stocks Now Drive the Market
The U.S. stock market is more concentrated than ever before. Just 10 companies make up almost 40% of the S&P 500, with Apple (7.6%), Microsoft (6.6%), and NVIDIA (6.5%) leading the pack. This means that a small group of tech companies has enormous influence over the whole market's performance.
This level of concentration is both an opportunity and a risk. When these big tech companies do well, they can lift the entire market. However, if they face problems, they could drag down many investment portfolios and index funds with them.
🙅 I don’t like the situation.
⛏️ Uranium Mining Comes Back To Texas
South Texas is becoming a key player in U.S. uranium production. EnCore Energy and Uranium Energy Corp have already started mining operations in 2023-2024, with 10 more sites ready for development. This is important because the U.S. needs a domestic uranium supply to support its growing nuclear power industry.
The South Texas Uranium Belt could help reduce U.S. dependence on foreign uranium imports. As more nuclear power plants are built to fight climate change, the demand for uranium is expected to grow significantly.
Nuclear power plants produce no greenhouse gas emissions during operation, and over the course of its life-cycle, nuclear produces about the same amount of carbon dioxide-equivalent emissions per unit of electricity as wind, and one-third of the emissions per unit of electricity when compared with solar.
Stocks and ETFs to watch: UEC (Uranium Energy Corp), EU (enCore Energy), URA (Global X Uranium ETF), URNM (Sprott Uranium Miners ETF), CCJ (Cameco Corporation).
🧑🤝🧑 Importance Of Population
Population size plays a key role in long-term economic growth. Larger populations often mean a bigger workforce, more consumers, and higher productivity potential. Countries with growing populations can sustain economic growth by creating jobs, expanding industries, and driving demand for goods and services.
However, aging populations or declining birth rates, as seen in some developed nations, may slow economic growth without proper adjustments, like immigration policies or productivity gains through innovation.
Stocks and ETFs to watch: VTI (Vanguard Total Stock Market ETF), EWU (iShares MSCI United Kingdom ETF), EEM (iShares MSCI Emerging Markets ETF).
This is not a financial or investing recommendation. It is solely for educational purposes.
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Thanks, Dan!