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If you were going by the headlines alone this week, you may be thinking that tech giants Alphabet (GOOGL) and Qualcomm’s (QCOM) recent earnings reports just signaled the end of the AI Boom. After announcing quarterly results, both stocks dropped sharply in response. In fact, GOOGL suffered a near-10% drawdown – one of its biggest post-earnings declines in recent history. And it seemed other tech stocks fell in sympathy. But investors selling their tech holdings now may be missing the forest for the trees. In our view, Alphabet and Qualcomm’s quarterly reports were actually really good news for the sector. The big concern with Alphabet’s earnings was the slowdown in its core cloud business. Cloud revenues rose just 30% in last quarter, down from 34% growth in Q3. This was the first quarter in a year that Alphabet’s cloud sales growth rate slowed. Ostensibly, that is worrisome because the majority of the firm’s AI business is in the cloud. That’s where Alphabet is providing AI compute and software to other companies. Those services have been the company’s big growth driver for the past few years. So, if those services are slowing, then Alphabet may be in trouble. But the “why” here is super-important. Tech Firms Aren't Facing a Demand Issue Alphabet’s cloud business isn’t slowing because demand is slowing. According to management, demand for the company’s AI cloud services remains robust. Instead, this slowdown is the result of constrained supply. That is, the company is seeing very strong demand for its AI products, but it doesn't have enough compute capacity to service all that demand. As management said on the firm’s quarterly conference call: “We do see and have been seeing very strong demand for our AI products… We exited the year with more demand than we had available capacity, so we are in a tight supply-demand situation…” For AI companies, this is a good problem to have. Interestingly enough, Microsoft (MSFT) is having the same struggle. In its earnings results delivered last week, Microsoft also reported a slowdown in its Azure cloud business. And similarly, the slowdown is due to datacenter capacity shortages relative to enormous AI demand. Azure AI services rose 157% in the quarter, and commercial booking soared 67% to around $300 billion. But management said that the company doesn't have enough datacenter capacity to meet customer needs. In other words, based on commentary from two of the most important tech companies in the world, the situation in the AI industry right now seems to be one of “too much demand, too little supply.” That’s a good situation to be in… becausea solution is coming. AI Compute Capacity Increases Are on the Horizon This year, companies like Microsoft and Alphabet are going to spend a whole lot of money to build more AI datacenter capacity. That means a flood of cash will go to the companies that build and service those data centers – think chip stocks, semiconductor suppliers, energy companies, etc. Just consider: last week, Microsoft said it will spend $80 billion on capital expenditures in 2025, most of which will go toward filling its datacenter capacity shortage. Last night, Alphabet said it will spend $75 billion on capex in 2025. And not to be left out, Meta (META) – another major AI services supplier – said last week that it too will spend about $60 billion on capex this year. Between those three tech giants alone, we’re looking at over $200 billion in capex in 2025, most of which will go toward bolstering AI infrastructure. | Recommended Link | | | | Take a look at this video… Inside, is an on-camera demonstration of one of the most amazing technologies you’ll ever see. It’s gotten overlooked with all of the hype around AI. But I believe this breakthrough will produce the #1 Tech Stock of 2025. |  | | Taking a Bird's-Eye View Meanwhile, Qualcomm beat quarterly revenue and earnings estimates. And management delivered a better-than-expected forecast for next quarter, too. The numbers were strong. But investors were worried about management’s commentary that the global smartphone market may not grow this year. We think those worries are short-term in nature. After all, remember the whole DeepSeek breakthrough that rattled tech stocks a few weeks ago? That was all about efficiency. Specifically, DeepSeek figured out a way to make a really capable AI model without super-advanced hardware. The firm made clear that through AI software optimization, you can make a really good AI model without the need for massive data centers. That is what’s next for the industry. It is called “edge AI,” and it’s all about building AI locally onto devices – not through the cloud. That way, the tech is at your fingertips at all times, not just when you’re connected to the internet. Qualcomm is perfectly positioned for this edge AI wave because it makes the processors that go into a lot of these devices. For example, it powers the AI capabilities in Samsung phones, makes mini AI PCs with Lenovo, works with Meta on its Ray Ban AI glasses, and brings AI to cars with companies like Hyundai. It’s even launching a new platform called AI On-Prem Appliance to bring AI to household appliances. We expect that edge AI will provide a huge boost to AI growth. Imagine if every device maker around the world started selling AI-powered versions of their offerings. They’d sell a whole heck of a lot more. That’s why we expect that a shift to edge AI will create a multi-year upgrade super-cycle across a multitude of consumer hardware products. And that super-cycle could start as soon as this year – and almost assuredly by next year. So… between Alphabet, Microsoft, and Meta reaffirming that the data-center spending boom remains vigorous… and Qualcomm suggesting that edge AI is the future… this week’s tech earnings reports provided a few big reasons to buy AI stocks. The Final Word However… I actually think the biggest gains on Wall Street won’t come from AI stocks over the next few months. Rather, the evidence suggests they could come from cryptos; specifically, altcoins. And I just hosted an emergency crypto market webinar to detail why I strongly believe that’s the case. Think about it: love him or hate him, Donald Trump is the most pro-crypto president in U.S. history. And he is implementing three specific new policies that could ignite the biggest crypto super-cycle ever. Not to mention, his pick for Treasury Secretary – Scott Bessent – is as pro-crypto as they come. And his past comments suggest a pragmatic approach, advocating for “smart regulation” that encourages innovation without compromising oversight. Given that outlook, we are obviously bullish on the crypto markets and believe this is a good time to own some altcoins. But this exciting fundamental backdrop isn’t the only reason we’re so bullish right now. Catch the webinar’s replay to learn why I think this could be the year of huge altcoin gains… much like 2021, when dozens of altcoins rallied more than 5,000% in a single year. And discover how my team’s quant-based trading algorithm attempts to identify a predictable pattern before cryptos surge, potentially as much as 10X, 50X, even 100X in a hurry – sometimes in 90 days or less. Get ready for an exciting year in the crypto markets. Sincerely, | 
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