This Week's Thematic Reads
If you missed out on this week's signals, we've got you covered
Artificial Intelligence
“AI is driving massive demand for edge computing infrastructure, as industrial and commercial users need to process more data locally to take advantage of AI's capabilities… Hardware and software providers alike are concluding that edge computing — moving processing power closer to where data is being generated — provides a bridge between 5G networks and cloud data centers. They're starting to package all three services.” Read more here
“U.S. software giant Microsoft will expand its artificial intelligence (AI) and cloud infrastructure in Spain through an investment of $2.1 billion in the next two years, the company's Vice Chair and President Brad Smith said in a post on social media site X. The move comes on the heels of its announcement of a 3.2 billion euros ($3.45 billion) AI-focused investment in Germany, spanning the next two years.” Read more here
“Announced in Adobe’s press release as “AI Assistant in Acrobat,” the new tool is described as a “conversational engine” that can summarize files, answer questions, and recommend more based on the content, allowing users to “easily chat with documents” to get the information they need. It’s available in beta starting today for paying Acrobat users. The idea is that the chatbot will reduce the time-consuming tasks related to working with massive text documents — such as helping students quickly find information for research projects or summarizing large reports into snappy highlights for emails, meetings, and presentations.” Read more here
“Apple's next-generation A18 and M4 chips for future iPhone and Mac models will feature an upgraded Neural Engine with "significantly" more cores, according to a report today from the Taiwanese publication Economic Daily News… On an earnings call this month, Apple CEO Tim Cook said the company was working on generative AI and would share details "later this year." iOS 18 should be announced at Apple's annual developers conference WWDC in June.” Read more here
Artificial Intelligence, Digital Infrastructure & Connectivity
“The outlook extends a streak of Nvidia shattering expectations, thanks to insatiable demand for its artificial intelligence accelerators — highly prized chips that crunch data for AI models. The technology has helped power a proliferation of chatbots and other generative AI services, which can create text and graphics based on simple prompts. “Accelerated computing and generative AI have hit the tipping point,” Chief Executive Officer Jensen Huang said in the statement. “Demand is surging worldwide across companies, industries and nations… Nvidia’s data center division, now by far its largest source of sales, generated $18.4 billion of revenue, up 409% from the same period a year earlier. Gaming chips provided $2.87 billion of sales.” Read more here
CHIPs Act
"The US plans to award $1.5 billion to GlobalFoundries, the largest domestic maker of made-to-order semiconductors, as part of the Biden administration’s effort to strengthen the nation’s chip production. The funding, outlined in a non-binding preliminary agreement, would flow to three projects: a new fabrication facility in Malta, New York, the expansion of an existing site in Malta and expansion of its Burlington, Vermont, manufacturing site. The US is also offering the company $1.6 billion in federal loans." Read more here
“Intel's complaints about the glacial pace of disbursement for CHIPS Act funds has finally paid off. According to a new report, the company is slated to receive a check from Uncle Sam shortly to the tune of $10 billion or so.” Read more here
“Washington is prepared to pump funds into Vietnam's chip sector to shore up supply chains and wants the country to "take advantage" of its bid to reduce reliance on China, a visiting U.S. envoy said. The U.S. is targeting seven countries for part of its CHIPS and Science Act, which includes $500 million for improving semiconductor training, cybersecurity and business climates globally, said Jose Fernandez, U.S. undersecretary of state for economic growth, energy and the environment.” Read more here
Consumer Inflation Fighters
“For the fiscal fourth quarter, comparable store sales — those from established stores and online operating over the past 12 months — rose 4%, slower than the 4.9% for the Walmart U.S. division for the previous quarter. They rose 6.4% in the second quarter. Global e-commerce sales were up 23%, compared to 15% in the previous quarter. But the average ticket— how much shoppers spent per trip— slipped 0.3% in the latest quarter from a year ago even as the number of transactions rose 4.3%. It's good news that inflation is coming down, but that means Walmart and other retailers have to do more work to sell more items.” Read more here
“Having been burdened by rising prices across the economy for several years, bargain-hunting consumers — and even higher-income households — remain on the lookout for deals. Customers had “immediately responded” to Walmart’s moves to lower the price of a rotisserie chicken by $1 and “roll back” the price of French bread to $1, said chief financial officer John Rainey.” Read more here
“PepsiCo is expanding beyond snacks and beverages by going after more meal occasions and dayparts while continuing towards its nutrient goals outlined in its pep+ agenda, CEO Ramone Laguarta said at the Consumer Analyst Group of New York conference this week.” Read More Here
Data Privacy & Digital Identity
“… digital identity management refers to the process of representing a consumer’s identity to a subscription-based service for verification and access purposes. With the average consumer juggling as many as 100 passwords, efforts are being taken to move away from passwords to easier, more secure authentication measures. Today, big tech companies like Google and Facebook offer some respite by allowing their credentials to be used for access to digital services. Now, automakers also stand to become key digital identity players…” Read more here
“While an individual’s digital identity is comprised of several data points or signals, the phone number has globally cemented itself as the key personal identifier, especially with number portability enabling people to keep their phone number for life. One report shows that this year mobile phone numbers will become the primary source of identity for more than 3 billion people. "When it comes to verifying a digital identity, the phone number is the single most important piece of data that businesses use to verify a person or company.."“ Read more here
“When it comes to ransomware attacks, median initial ransom demands for 2023 spiked 20% year-over-year to reach $600,000, with some sectors hit much worse than that: The legal, government, retail, and energy industries are now routinely seeing median demands of $1 million or more.” Read more here
“With the upcoming release of iOS 17.4, iPadOS 17.4, macOS 14.4, and watchOS 10.4, the company is bringing a new cryptographic protocol called PQ3 to iMessage that it purports to offer even more robust encryption and defenses against sophisticated quantum computing attacks. Such attacks aren’t yet a broad threat today, but Apple is preparing for a future where bad actors try to unwind current encryption standards and iMessage’s security layers with the help of massively powerful computers.” Read more here
Digital Infrastructure
“Throughout the United States, widespread cellular outages were reported on Thursday morning following the solar flares. According to The Associated Press, tens of thousands of outages were reported by major cellular carriers such as AT&T, Verizon, and T-Mobile.” Read More Here
EV Transition
“Ford Motor Co. cut the price of its electric Mustang Mach-E by as much as $8,100 after its sales tumbled 51% in January when the automaker had to stop offering tax incentives on the plug-in model. The automaker lowered prices on multiple versions of the 2023 model Mach-E by a range of $3,100 to $8,100, according to an emailed statement Tuesday.” Read more here
Luxury Buying Boom
“Chinese shoppers have increasingly turned to Hainan in recent years as three years of pandemic-related border closings cut off the option of purchasing beauty brands such as L'Oreal-owned Lancome and Estee Lauder's La Mer at duty free counters in Korea or Hong Kong. Global luxury players, including brands from leading conglomerates LVMH, and Kering also piled into Hainan to reach consumers domestically. The expansion of Hainan's duty-free shopping in 2025 also means luxury brands can operate their own duty-free stores, rather than rely on partnerships with local players such as China Duty Free Group.” Read more here
Space Economy
“Intuitive Machines' IM-1 mission will be the first commercial lunar lander and the first United States spacecraft to land on the Moon since Apollo 17 in 1972. Our spacecraft, Nova-C, will spearhead this trailblazing mission toward creating a commercial lunar economy, delivering commercial and NASA payloads that will pave the way for sustainable human lunar missions.” See More Here
The strategies behind our Thematic Models:
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EPS Diplomats - Profitable large capitalization companies proven to produce above-average EPS growth and provide investors with the benefit of multiple expansions.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.
Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
Space Economy – Companies that focus on the launch and operation of satellite networks.
The strategies behind our Dividend Income Models:
Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.
Don’t be a stranger
Thanks for reading and if you have a suggestion for an article or book we should read, or a stream we should catch, email us at info@tematicaresearch.com. The same email works if you want to know more about our thematic and targeted exposure models listed below.