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1. Pessimism around the pace of AI investments.

Traders got nervous about Microsoft’s AI investments and the sustainability of the industry’s breakneck growth rate. An analist report form TD Cowen suggested that Microsoft has walked away from new data center projects in the U.S. and Europe that would have amounted to a capacity of about 2 gigawatts of electricity. The report attributed the pullback to an oversupply of the clusters of computers that power artificial intelligence.

However, analists from JPMorgan came out with an opposite analysis the same day.

“The demand for compute resources continues to accelerate and the ramp in Blackwell related shipments is supporting revenue and orders this year, with visibility through 2026 for continued growth. As widely publicized, there is some movement with some projects on pause, but this has little to do with demand, and no one thinks it will impact the strong trend line. It would appear that it's more to do with the next technology platform iteration, with customers taking extra time to future proof themselves as much as possible, highlighting the complexity of the new ecosystems. Indeed, the new Blackwell tech has yet to even be installed fully/perfected, causing customers to evaluate more thoroughly how to approach the next gen which is still 2-3 years away.

This is not a slowing at peak but actually reinforces how early in the cycle it is with plenty of capital flowing in to reinforce the growth.

The bottom line is that we continue to see little evidence to support a narrative of overcapacity at peak that risks a more competitive environment in a normalized technology setting.

Feedback from the channel suggests the opposite, and we remain positive on related names, specifically VRT and ETN.”

But sentiment is still fragile and the market choose to ignore the positive report. The tech sector was hit pretty hard, including digital infrastructure stocks, energy infrastructure stocks, and quantum computing stocks.

2. There are alternatives to the US market.

The US is no longer the no-brainer investment destination it once was, and stocks in the rest of the world are setting up to be a multi-year trade.

The US accounts for almost three quarters of the weight for the MSCI World index of developed equities, almost certainly a record high. Diversifying portfolios to have greater ex-US equity risk is crucial.

The best options will be markets that are cheaply valued, less vulnerable to foreign capital outflows, have low levels of debt, are under-owned and have undervalued currencies.

Last but not least, finding markets that are least correlated to the US is crucial. The chart below shows each individual stock-market’s correlation. The US, as well as several European markets, are highly correlated, indicating that these markets deliver little variation from global stock-market moves, for which the US is often the principal driver. European stocks are thus unlikely to offer much in the way of diversification from the US, even if they outperform. Further, if US stocks keep falling, European ones will probably do likewise, and even if they outperform on the way down they’re unlikely to do so by much.

On the other hand, markets on the left-hand side of the chart are better placed to offer global diversification. Among these are Indonesia, Hong Kong/China, Chile, Brazil, Mexico and Korea.

3. But diversification is not the only criterion for choosing how to allocate equity risk. Valuation is also key.

The US is the most richly valued of all the main EM and DM MSCI indexes in dollar terms. Some European markets, such as France and Germany are cheaper, but not compared to other countries. However, China, Korea, Indonesia and Colombia stand out as being relatively cheap.

4. Bank of America’s bull vs. bear case for S&P 500: 6500 or 5500 by year end?

In its latest technical outlook, Bank of America presented a wide range of outcomes for the S&P 500 in 2025, with year-end targets spanning from 5500 to 6500, depending on how key macro and market factors evolve.

The bear case sees growing risks that could push the index back toward 5000, with a potential year-end recovery to 5500.

Key warning signs include a possible double top in the S&P 500, weakening breadth, and bearish divergences in Dow Theory indicators. Among the key concerns is the U.S. labor market, which BofA describes as “gradually weakening.” If the unemployment rate accelerates past 4.5%, it could trigger a “self-fulfilling ‘R’ word selloff to 5000,” Ciana warned.

5. Uranium stocks have been veering toward bust mode in 2025.

Escalating trade tensions between the US and Canada, one of the world’s key producers of the nuclear fuel, are playing a major part. Lately, so are talks toward a ceasefire in Russia’s war in Ukraine, which raise the prospect of looser sanctions on Russian production of the radioactive metal and the potential for more supply.

The price of uranium is now down more than a third from early 2024, and has slumped roughly 11% this year alone.

It was just a little more than a year ago that uranium was booming after roughly a decade in the doldrums. More countries were moving to re-open nuclear reactors, and electricity demand was expected to surge with the growth of artificial intelligence and data centers. Russia’s early 2022 invasion of its neighbor only tightened supplies.

But for weeks now, the headwinds have been mounting. Investors are reluctant to bet that the stability seen in the shares in recent days will last until they get a better picture of what will happen in Ukraine. Meanwhile, questions around President Donald Trump’s tariff proposals have caused utilities to delay signing long-term purchase agreements for the metal, says John Ciampaglia at Sprott Asset Management. “They’re just blowing so much smoke at the market and nobody knows what’s what,” said Ciampaglia, CEO of the firm, which offers natural resource-focused ETFs. “It just creates so much uncertainty that it’s paralyzing people making decisions.” Investors, in the meantime, have “just stepped to the sidelines.”

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