International Markets Surpass US Performance Year-to-Date; Chinese Enthusiasm Drives Purchases
Overseas Market Performance: Overseas markets, particularly South Korea, Vietnam, and Mexico, have significantly outperformed the S&P 500 year-to-date, highlighting the importance of diversifying investments beyond U.S. borders.
U.S.-China Trade Deal Impact: Positive market sentiment is driven by the anticipated U.S.-China trade deal, with aggressive buying in major stocks and ETFs, while rare earth stocks face selling pressure due to speculation about China's market actions post-deal.
Argentina's Political Shift: Javier Milei's election victory in Argentina, supported by U.S. financial backing, is seen as a win for President Trump and reflects a global shift towards right-leaning politics, resulting in a surge in Argentine stocks.
Investment Strategies and Market Trends: Investors are advised to maintain long-term positions while considering protective measures like cash or short-term trades, and to focus on high-quality bonds in a traditional 60/40 portfolio strategy amidst current market conditions.
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- Earnings Beat: Alphabet's Q4 2025 results exceeded Wall Street estimates with a 2.4% revenue surprise and a 6.8% earnings outperformance, reflecting strong financial performance despite a 6.5% stock drop post-report.
- Cloud Business Surge: Google Cloud's sales surged 48% year-over-year to $17.7 billion, representing 15.5% of Alphabet's total revenue, while operating income soared 154% to $5.3 billion, indicating robust growth potential in the AI sector.
- Market Reaction Analysis: Although Alphabet lost approximately $250 billion in market value over three days due to concerns over massive AI infrastructure spending, it remains the top performer among the
- Massive Market Potential: According to Bloomberg Intelligence, the total addressable market for AI accelerators is expected to grow at a 16% CAGR, reaching $604 billion by 2033, providing strong market support for Micron Technology.
- Surging Memory Demand: Micron dominates in high-bandwidth memory (HBM), dynamic random access memory (DRAM), and NAND chips, with forecasts indicating the memory market could grow to $100 billion by 2028, highlighting the accelerating demand for memory chips.
- Capital Expenditure Driving Price Increases: With big tech expected to spend over $500 billion on AI infrastructure, shortages in HBM solutions are anticipated, with TrendForce research suggesting DRAM and NAND prices could soar by 60% and 38%, respectively, in Q1 alone.
- Attractive Valuation: Micron currently trades at a forward P/E ratio of 12, significantly lower than other leaders in the AI chip market, and combined with the multi-year supercycle for HBM chips, this indicates strong investment potential for Micron stock.
- Dow Index Milestone: The Dow Jones Industrial Average has surpassed 50,000 for the first time, marking a significant recovery in the U.S. stock market, reflecting increased investor confidence in economic recovery, which may lead to more capital inflows into equities.
- Buying Opportunities: Stocks like JPMorgan, Apple, and Boeing have entered buy zones, indicating that the performance of these large companies has attracted investor interest, potentially driving their stock prices higher and enhancing market vitality.
- Nasdaq Divergence: While the Nasdaq remains below key support levels, some AI-related stocks are reviving, indicating a potential rebound in tech stocks that may provide new investment opportunities for investors.
- Market Sentiment Improvement: The overall market sentiment is improving, as optimistic expectations for future economic growth may encourage more capital to flow into the stock market, thereby driving further increases in the overall market.
- Massive Market Potential: According to Bloomberg Intelligence, the total addressable market for AI accelerators is expected to grow at a 16% CAGR through 2033, reaching $604 billion, providing strong market support for Micron Technology.
- Surging Memory Demand: Micron's management forecasts that the memory market will grow from $35 billion in 2025 to $100 billion by 2028, indicating a much faster acceleration in demand for memory chips compared to the GPU market.
- Capex Driving Price Increases: Big tech is expected to spend over $500 billion on AI infrastructure this year, leading to shortages in high-bandwidth memory (HBM) solutions, with TrendForce research suggesting DRAM and NAND chip prices could soar by 60% and 38%, respectively, in Q1 alone.
- Significant Valuation Appeal: Micron currently trades at a forward P/E ratio of 12, significantly lower than other AI chip leaders, and combined with strong market trends, this gives investors confidence in its future performance.
- Structural Threat Emerges: Analyst Louis Gerard highlights that AI acts as a force multiplier, lowering entry barriers and enabling small teams to create products that previously required dozens of engineers, thereby weakening the competitive moat for many SaaS companies and potentially rendering past premium pricing models obsolete.
- Winners and Losers: Microsoft (MSFT) is seen as a winner due to its infrastructure integrating GitHub Copilot and Azure AI, while Adobe (ADBE) and Figma (FIG) face threats from lightweight competitors, particularly as Figma's seat-based pricing model may erode.
- Challenges in Enterprise Software: Although companies can now create custom enterprise software, ensuring consumer data safety through backend systems remains complex and costly, with SaaS firms having invested heavily in this unseen aspect, leading many non-tech companies to avoid replacing existing software.
- Importance of Brand Trust: Brett Ashcroft Green emphasizes that consumer trust in brands like Adobe and DocuSign makes businesses reluctant to switch to custom software, as brand recognition plays a crucial role in client confidence; while SaaS stocks may see short-term sell-offs, AI is expected to help these established brands build and improve trusted software more efficiently.
- Earnings Beat: Alphabet reported fourth-quarter revenue of $113.8 billion, an 18.8% increase year-over-year, with earnings per share of $2.82, surpassing analysts' expectations of $2.63, demonstrating strong performance in a challenging environment.
- Capital Expenditure Plans: The company plans to nearly double its capital expenditures in the coming year, primarily investing in AI infrastructure; despite market concerns about tech companies' ROI on AI, Alphabet's spending is viewed as effective.
- Cloud Business Growth: Google's cloud computing segment generated $17.7 billion in revenue in Q4, a 48% year-over-year increase, with operating income more than doubling to $5.3 billion, indicating a rising contribution to overall revenue, now at 15%.
- Optimistic Market Outlook: According to Mordor Intelligence, the global AI data center industry is expected to grow at an annual rate of 25% through 2031, and with its new Tensor Processor Units, Alphabet is well-positioned to capture a significant share of this market growth.










