Fed, PCE and Big Tech: AI trade reset week
Fed, PCE and Big Tech: the week that could reset the AI trade
This week packs a Fed decision on Wednesday, Q3 GDP and September PCE on Thursday, the ECB and the BoJ, plus earnings from Microsoft, Alphabet, SK hynix, Intel and Amazon. A hold at 3.75-4.00% is roughly 90% priced, so the tone matters more than the decision: does the door stay open to a December hike while Brent sits near $115?
The 10-year ended last week near 5%. Lower yields help long-duration AI, chip and cloud names, but only if that reflects cooling inflation rather than weaker growth. Core PCE is expected near 3.1%.
For the hyperscalers the bar is proof that record AI capex generates returns, not just bills. SK hynix gives the memory read: HBM shipments and Q4 pricing.
My view: my 1-3 year conviction in AI infrastructure, semis and memory is intact. SMH and SOXX stay my largest positions, and this week I watch free cash flow and return on capital as closely as growth. Gradual positioning beats chasing swings.
What is the bigger risk for you this week: the Fed tone or Big Tech capex?
