☕ This company already powers 35% of hyperscale AI data centers

Good morning! 👋 

Time to panic? 

Nah. 

That would be next Tuesday. 🤦‍♂️ 

Just kidding. 

There is always a path to profits. 

Not sometimes, not part of the time. 

Always! 

Here’s my playbook. 

1 - Fed inflation data and today’s trading 

We’ve seen this playbook more times than I can count. 

You know the routine if you have been reading the 5 with Fitz and OBA for any length of time. And you also know what it takes to win.

Here’s the sequence if you’ve just joined us... 

First, big traders are driven by the “cost” of money because it impacts the vig they’ve gotta fork over for all the cash they borrow (leverage) to magnify their returns. 

Second, they sell when yields go up, particularly ahead of major inflation data like we got this morning because that scares the weak money out and to the sidelines. 

Third, when the reports come in weaker/lower/slower, they immediately turn to the upside leaving retail investors who went to the sidelines because they thought they were being smart in the dust. Then, after a quick upshot to draw in the FOMO crowd, they often pull a quick repeat to the downside to continue the pillaging. 

Think about it. 

Lots of selling past few days, data comes out, uptick this morning to sweep the stops, clobber the breakout buyers, and foil the FOMO artists then... hard down (which is underway as I type). 

When they’ve cleaned the pipes enough, they do it all over again only in reverse to the upside. 

It’s their job. 

Don’t fall for it! 

They’re out to bag a quick buck. 

We’re in to win and to build wealth. 

Keith’s Investing Tip: Beating these guys at their own game isn’t that difficult but you must learn to think like a shark, not a minnow. That means buying into weakness and selling into strength continuously using tactics that take away their advantage.  

If you want some help (and to become a better, more consistent, and – dare I say it - more profitable investor over time), I’ll be here. 

2 – Dan Ives & I agree: Palantir most underrated tech stock today 

And you heard it here first. 

Dan, by the way, very kindly acknowledged that on stage in Las Vegas where we last shared the podium together. 

I can’t think of a higher compliment. 

Danno rocks, no two ways about it. I read his work and encourage you to do the same. 

Meanwhile, it's another day and another contract for Team Karp. (Read) 

3 – Japan intervenes with chump change 

The Japanese Yen hit a 34 year low in April only to rebound sharply in recent weeks. 

No surprise. 

Japan spent 9.7T Yen or roughly $62.25B to prop things up from April 26th to May 29th according to the Japanese MOF (Ministry of Finance). (Read) 

Finance Minister Suzuki Sunichi wouldn’t confirm that when asked if the government had stepped in saying in classic Japanese fashion that when “there is excessive movement, it may be necessary to smooth it out.” 

What’s next? 

There’s a popular line of thought amongst the allocators that it’s time to buy into Japan because they believe a cheaper Yen offers Japanese exporters an enormous cost advantage and, by implication, bigger profit potential. 

Historically that’s true but these days not so much. 

What they’re missing is that most of the major sogo-shosha (Japanese trading houses) now derive their revenues from non-exporting related activities ranging from convenience stores to frozen foods, real estate, and renewable energy. 

I’d rather buy growth and innovation any day of the week. 

Trade Idea: Short EWJ or putskies on the same. 

4 – Dell’s dump 

The company beat estimates and offered what some are calling rosy guidance. (Read) 

Shares are down anyway. 

No kidding. 

I’ve thought for a long time that Dell was operating at close to or zero margins when it comes to AI servers which is what the street has apparently picked up on. 

Contrast that with a company like Nvidia which sells the chips it makes at a 60-65%+ margin no matter whose servers they go into. 

There will come a day when it pays to buy equipment makers, but chips are the place to be because the equipment it goes into is increasingly commoditized. 

Dell might be an interesting turnaround play at some point and under $100 but AMD and NVDA are interesting now. 

5 – This company already powers 35% of hyperscale AI data centers 

I get a lot of questions from super sharp 5 Fitzers and members of the OBA Family about energy companies that’ll be needed to power AI. 

All that data takes a lot of juice. 

It’ll take more. 

Goldman Sachs sees data center power demand growing by 160% into 2030 but I think it’ll be more like 200% or more within the next few years. 

If I had to pick, I’d take a hard look at Dominion Energy because it’s got a lock on Virginia which is currently home to 35%-40% of global hyperscale data center capacity including facilities belonging to the biggies (Azure, AWS, and GCS). 

The stock is down double digits but pays a yield of nearly 5% which is appealing as heck to dividend-hungry investors. 

Should you buy Dominion Energy? 

Depends.  

My fav has roughly the same shareholder yield, but the dividend growth is considerably higher, stronger, and more consistent.  

Dominion could ride the AI hype wave, but then what? 

I want the stocks I buy to be there when I need ‘em. 

You? 

Bottom Line 

It’s always better to play offense, even if you have to think defensively to do it. 

Let’s finish the week strong and, as always, MAKE it a fabulous day. 

You got this – I promise! 

Keith 😊