Stephanie Link on AI's Second Inning, Meta's Capex, and Market Opportunities

Market Performance and Expectations

• 📉 Starbucks stock is up despite disappointing results, possibly due to lowered expectations and the company doing its best to manage costs and product offerings.
• 💡 Starbucks is facing negative comparable store sales for the next quarter, but restaurant margins remain industry-high, and they are focusing on digital products and menu revamps.

Meta's Increased Capex and AI Investment

• 💰 Meta's stock is trading lower due to increased capital expenditures for 2025 and projections for even higher spending in 2026, departing from previous operating leverage.
• 🧠 Meta is heavily investing in building data centers and hiring talent for AI, aiming for long-term growth, though this near-term spending is disappointing to investors.
• 📈 Despite spending concerns, Meta's ad impressions are up 14% and pricing is up 10%, indicating successful monetization of AI.

The AI Investment Narrative

• 🚀 The AI storyline is powering the market, with companies like Meta spending heavily on infrastructure, which in turn benefits companies like Nvidia.
• 💡 Stephanie Link believes we are in the second inning of the AI trade, suggesting continued investment opportunities.

Broader Investment Opportunities in AI

• 📊 Investment in AI can be played through Mag 7 companies for growth and monetization, or downstream in technology providers like Nvidia and Broadcom.
• 🛠️ Opportunities also exist in industrials and utilities that support AI infrastructure, such as grid manufacturers, data center builders, and power providers, including companies like Eaton and GE Vernova.
• ⚠️ Microsoft's stock dip is attributed to Azure growth beating expectations by a smaller margin (200 basis points) compared to previous quarters (300-400 basis points), despite still significant growth.