Fed Meeting Another Tech Tailwind

Mark tomorrow’s day down on your calendar for posterity.

Tomorrow is the day when the Fed and Governor Jerome Powell bailed out tech stocks at all-time highs.

Yes, that is what they are about to do. You can’t make this up even if you tried!

Tech stocks ($COMPQ) have been marching higher, almost like a finely tuned machine.

And the Fed is about to light octane to this march and catalyzing it higher.

It didn’t have to be this way, and tech stocks most likely would have still been higher if the Fed dealt with inflation in a timely fashion.

They had 5 years but no cigar.

Now, the stage is set for 6 rate cuts starting tomorrow until the end of 2026, which could morph into 8 or 10 by the end of next year. Then think about how the new cheap money will be bulldozed into share buybacks.

Nothing is more bullish than that!

At its core, lower interest rates reduce the cost of borrowing, a boon for tech companies that often rely on debt to fuel expansion.

Tech giants like Nvidia (NVDA), Microsoft, and Amazon, along with smaller innovators, frequently issue bonds or secure loans for research and development (R&D), data center builds, and acquisitions. High rates since 2022 have squeezed margins by elevating these costs—Nvidia alone invested billions in AI chip production under 5%+ rates. A 25-basis-point cut directly trims interest expenses; for a company with $10 billion in debt at 5%, this saves roughly $250 million annually in payments.

This freed-up capital can be redirected toward high-return projects, such as AI infrastructure or cloud computing expansions, boosting earnings per share (EPS) and justifying higher stock valuations.

Lower sustained rates will slash borrowing costs further, enabling aggressive capex. Tech’s capital-intensive nature—semiconductor fabs cost billions—thrives here; Intel and TSMC could accelerate U.S. manufacturing without rate drag.

The AI narrative provides insulation: even if broader growth slows, tech’s secular trends ensure outperformance, as evidenced by the sector’s 122% revenue jump for Nvidia in recent quarters.

With the beginning of the long-awaited easing cycle, this gives cover for big tech stocks to pour extra cash into the AI data center buildout.

If this AI pivot fails, we probably won’t know it for a while, and many billionaires will be made before that.

For example, take a look at the revenue promises by the CEO of Oracle (ORCL), Larry Ellison, with the AI data center build-out, and it is hard to believe that it will be achieved.

Yet ORCL shareholders didn’t care in the short-term as the stock rose almost 40% meaning that Ellison’s wealth jumped by a cool $89 billion in one day.

AI will deliver in the short-term, but whether it will pan out in the long term is a big if.

I am not sold on it, but that doesn’t matter.

In the short-term, I believe we have been greenlit for a strong rally into the end of the year, and it wouldn’t surprise me to see the Nasdaq demonstrably higher by the end of 2026.

I am bullish on the Nasdaq.

Buy the dip in tech.