Big Spenders Vs. Cash-Strapped Shoppers, AI, Hacks and Other News for Investing
Let's scan through the headlines for the stories of the week that speak to our Pro Portfolio holdings.
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Mixed messages from Washington and uncertainty over the economy and corporate earnings expectations lead the financial news, but many other stories are just under the surface. Those include reports about the adoption of artificial intelligence, new cybersecurity threats, and price pressure weighing on consumers -- all headlines you might have missed but that speak to our Pro Portfolio holdings such as ServiceNow NOW, Elastic ESTC, Marvell MRVL, and Nvidia NVDA. Let's dig in:
Artificial Intelligence
Today Apple has officially announced the next phase of its rollout of AI features under the Apple Intelligence umbrella. In April, the company will release iOS 18.4 and iPadOS 18.4, just as rumored. With these versions, the EU will finally get access to Apple Intelligence features for the first time. Read more here
Fogel expressed his belief GenAI will be a game-changer — driving not just personalized travel planning but enabling seamless and frictionless journeys and connected experiences for travelers. Booking.com is leveraging GenAI to enhance its customer experience, introducing new features like the Smart Filter tool. This allows travelers to describe their ideal accommodation in their own words, and GenAI scans Booking’s inventory to provide tailored results. Read more here
Walmart and Amazon are doubling down on AI investments to drive efficiency, enhance customer experiences and fuel business growth, with both companies making significant strides in expanding their AI capabilities across multiple divisions. Read more here
Central to Carvana’s continued success, according to the shareholder letter, is its investment in AI and digital transformation. The company has leveraged machine learning and advanced technology to streamline the car-buying experience, providing consumers with faster, more personalized options. Read more here
McDonald’s is the latest fast-food restaurant to use artificial intelligence to step up its game. The fast-food giant is overhauling all 43,000 restaurants with an AI makeover in an attempt to cut wait times and make a better experience for both customers and employees. Read more here
According to a December survey of restaurant operators and financiers by TD Bank, 42% said AI and automation will have the greatest impact on the restaurant industry in 2025. That’s second only to lower interest rates, at 46%. Read more here
GenAI is delivering impressive returns for CFOs. The report showed that as of December, nearly 90% of surveyed CFOs reported a “very positive” ROI from the technology, a sharp increase from just 26% in March 2024. This dramatic shift underscores the growing confidence in GenAI’s ability to deliver measurable value. As CFOs see tangible improvements, the use of GenAI has expanded across a broader range of business functions. Read more here
Position: Alphabet GOOGL, Amazon AMZN, Elastic ESTC, Meta Platforms META, Microsoft MSFT, ServiceNow NOW
Artificial Intelligence, Cybersecurity
High-uncertainty firms were more likely to have turned to advanced technologies to efficiently deal with cyber threats, according to the report. To that end, 44% of the most uncertain firms had invested in technologies such as artificial intelligence-driven threat detection. AI is also starting to emerge as a possible source of online threats, according to cybersecurity firm AppSOC, which dubbed the DeepSeek AI model a “Pandora’s box of security risks” after a round of tests on the technology. Read more here
The risks posed by LLMs, a form of generative artificial intelligence that communicates through language in a humanlike way, are already manifold. There is, for example, a danger that sensitive corporate or personal information inadvertently or deliberately will be exposed to models widely accessible to the public. There is also a possibility models can bring unsafe code or data into a company. Such threats are bound to multiply as LLMs are commoditized… Read more here
Italy's data protection watchdog has blocked Chinese artificial intelligence (AI) firm DeepSeek's service within the country, citing a lack of information on its use of users' personal data. The development comes days after the authority, the Garante, sent a series of questions to DeepSeek, asking about its data handling practices and where it obtained its training data. Read more here
Position: Elastic, First Trust Nasdaq Cybersecurity ETF CIBR, Microsoft
Cash-Strapped Consumer
Consumer sentiment saw a 9.8% month-over-month decline and a 15.9% year-over-year decline, according to the survey’s final results for February released Friday (Feb. 21). While all five components of the index deteriorated during the month, the trend was “led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent,” Read more here
Two of America’s largest retailers, Target and Best Buy, warned Tuesday that prices will increase following President Donald Trump’s tariffs on imported goods from Mexico, Canada and China. Target’s CEO said the price increases could happen a lot sooner than you think. Read more here
Looking ahead, firms expect both cost and price increases to move higher in 2025. Moreover, year-ahead inflation expectations have risen from 3 percent last year at this time to 3.5 among manufacturing firms and 4 percent among service firms… Read more here
Position: Amazon, Costco COST
Cybersecurity
Crypto exchange Bybit said it was hacked, resulting in what analysts estimate was the loss of almost $1.5 billion worth of tokens in the biggest theft ever committed in the industry. Researchers believe North Korean hackers were likely responsible. Read more here
Microsoft warns that Chinese cyber-espionage threat group 'Silk Typhoon' has shifted its tactics, now targeting remote management tools and cloud services in supply chain attacks that give them access to downstream customers. The tech giant has confirmed breaches across multiple industries, including government, IT services, healthcare, defense, education, NGOs, and energy. Read more here
Over 1,000 websites powered by WordPress have been infected with a third-party JavaScript code that injects four separate backdoors. "Creating four backdoors facilitates the attackers having multiple points of re-entry should one be detected and removed," c/side researcher Himanshu Anand said in a Wednesday analysis. Read more here
Position: Elastic, First Trust Nasdaq Cybersecurity ETF, Microsoft
Digital Infrastructure
According to a recently published report from Dell'Oro Group, the trusted source for market information about the telecommunications, networks, and data center industries, worldwide data center capex is projected to surpass $1 trillion by 2029. Read more here
Based on market research from Bloomberg Intelligence, total spending on AI inference/fine-tuning, AI workload monitoring, and training infrastructure, including AI servers, AI storage, training compute, cloud workloads, and networking, will reach approximately $399 billion by 2028. Read more here
Position: Marvell MRVL, Nvidia NVDA
Digital Payments
The European Central Bank wants to establish a blockchain-based payment system that allows financial institutions to settle transactions in central-bank money, a potential step toward introducing a wholesale central bank digital currency, or CBDC. Read more here
Position: American Express AXP, Mastercard MA
Energy Pain Point
The U.S. Department of Energy has been working for years to resuscitate the American nuclear sector, advancing the development of new reactors to meet the enormous incoming electrical demands of big new industrial facilities, from data centers and Bitcoin mines to chemical plants and desalination facilities. Leaders in Texas, the nation’s largest energy producer and consumer, have declared intentions to court the growing nuclear sector and settle it in state. Read more here
A volunteer advisory group told the utility that serves Colorado’s second-largest city that it should look at adding a small nuclear reactor for additional power generation. Colorado Springs Utilities (CSU) said it is reviewing the recommendation from the Utility Policy Advisory Committee (UPAC). That committee, which is not affiliated with the utility, in June of last year began researching the feasibility of nuclear energy for CSU. Read more here
Position: Eaton ETN, VanEck Uranium & Nuclear ETF NLR
Luxury Buying Boom
The top 10% of earners—households making about $250,000 a year or more—are splurging on everything from vacations to designer handbags, buoyed by big gains in stocks, real estate and other assets. Those consumers now account for 49.7% of all spending, a record in data going back to 1989, according to an analysis by Moody’s Analytics. Three decades ago, they accounted for about 36%. Read more here
Consumers keep spending on travel, shrugging off higher prices for everything from hotel rooms to dinners out to indulge on vacations, according to Booking Holdings Chief Executive Glenn Fogel. The head of the travel-booking company said that the strong demand from recent months isn’t likely to let up… One factor helping stretch travel budgets is a stronger dollar. Read more here
Position: American Express AXP
The Strategies Behind Our Thematic Models
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
Cash Strapped Consumer - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cybersecurity - Companies that focus on protecting against the penetration of digital networks and the theft, ransom, corruption or destruction of data.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Digital Lifestyle - The companies behind our increasingly connected lives.
Digital Payments - This model focuses on companies benefitting from the accelerating structural adoption of digital payments and financial technology (FinTech).
Energy Pain Point - Companies poised to prosper from rising power demand.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
