The Game Plan Until Winter

I just executed a bull call spread in chip company Nvidia (NVDA), because the Mag 7 has more to run, and I would be a fool to voluntarily avoid this rally.

It’s been a tough slog to get to this point.

I absolutely do blame the Fed for not raising rates and removing inflation when they had the chance.

Now that we begin this new rate cut cycle, we are at all-time highs with products such as coffee, cattle, the price of food, and housing prices still inflated.

As we enter into this new era, prices of many asset groups will skyrocket, and tech is no exception.

I wouldn’t find a problem for readers to go aggressive into tech stocks deep into the winter period, because rate cuts deliver the most alpha at the beginning of the cycle.

Adding stocks like Nvidia or the new AI darling Oracle (ORCL) makes sense here, even at expensive prices.

The Fed putting a new floor under tech stocks will spur investor momentum and demand, and we are just in the beginning innings of this.

The collection of 7 top-tier AI companies has dominated U.S. equities for years, driving over half of the S&P 500’s gains in 2023 and 2024.

If we look at how much they are worth today, they have a combined market cap that exceeds $19 trillion, representing 34.5% of the index.

Explosive earnings growth will remain the core driver. In early 2025, the Mag 7 reported 28% EPS growth, dwarfing the S&P 493’s 9%.

Microsoft’s Azure cloud surged 39% YoY, fueled by AI demand, while Amazon’s AWS and Meta’s ad revenues hit records.

Nvidia’s AI chip dominance propelled 1,500% gains from 2020-2025.

AI’s insatiable demand creates a self-reinforcing flywheel.

The Mag 7 are projected to spend over $414 billion on cloud infrastructure and data centers in 2025, boosting their own ecosystems while locking in market share.

Nvidia’s GPUs power this, with hyperscalers like Microsoft and Amazon monetizing via Azure and AWS expansions. Meta’s AI integrations in ads and WhatsApp/Instagram acquisitions exemplify reinvention.

Short-term, this spending boom—coupled with power and cybersecurity ripple effects—positions the group as indispensable.

Tech firms’ moats—global brands, loyal bases, and scale—enable pushback against regulations and competitors.

In the short term, I would not be surprised if another wave of capital hit American shores and boosted tech stocks by 15% by the end of the year.

There’s a lot to not like economically in many different places post-2020 that has spilled over and soured many asset classes, but tech companies are powering through with this lean and efficient model.

Ultimately, the question comes down to if the AI bubble will pop or not before yearend and I believe there is a minimal percentage chance that will happen.

Too many tailwinds support tech shares going higher, and even if domestically, the internals are weakening further and the distribution of wealth is becoming even more uneven, these trends won’t affect behemoths like Nvidia, Apple, and Amazon from going higher.

I would even throw in Google in the short-term, after a massive regulatory victory has set them up nicely for a strong end-of-the-year run.