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The AI Investing Pulse

May 1st, 2025

In this Week’s Edition:

1. Analysis - AI Leaders: Earnings Strength Meets Economic Slowdown

2. Stock Ideas - Top AI Stocks Poised for Growth

3. News - Should investors worry about Nvidia's in China?

4. Startups - How The Next 24 Months Could Transform Your Portfolio

5. Trends - AI Adoption could Boost Global GDP by an Additional 15%

6. Other News - The Top 10 Enterprise Generative AI Applications

🔎 AI Leaders: Earnings Strength Meets Economic Slowdown

The AI revolution has powered a dramatic rally in tech stocks, catapulting new players into the spotlight and breathing new life into established giants. But with the Q1 earnings season now well underway, and a surprise economic contraction confirmed, this moment is fast becoming a reality check.

The “easy money” phase, driven by narrative and promise, appears to be behind us. Markets are now asking tougher questions—and looking for execution.

🧮 GDP Contraction: A New Headwind for AI?

Adding to the pressure, preliminary data shows the US economy contracted by 0.3% in Q1 2025, a signal that macro conditions may be tightening just as AI capital spending accelerates.

This raises critical questions:

• Corporate Budgets Under Strain: Ambitious AI projects may face delays or downsizing as CFOs look to preserve cash, even if AI is seen as a long-term productivity driver.

• Cloud Spend Sensitivity: AI runs on the cloud, and broader IT belt-tightening could ripple through to key providers like Microsoft, Amazon, and Google.

• Valuation Fragility: Many AI names still trade at lofty valuations. As uncertainty increases, the market may grow less tolerant of “priced-for-perfection” multiples.

🧾 Microsoft & Meta: Earnings in Focus

Two of AI’s bellwether companies, Microsoft and Meta, reported solid results yesterday, reinforcing the narrative that AI is starting to deliver. But even strong earnings sit against a backdrop of economic caution.

🟦 Microsoft (MSFT)

• Revenue: $70.1 billion (+13% YoY)

• Net Income: $25.8 billion (+18% YoY)

• CapEx: $20 billion in Q1; full-year spend expected to exceed $80 billion

Azure grew 33%, with AI contributing 12 points. Copilot is gaining traction. But top-line growth has cooled slightly from 18% in the prior quarter.

🟪 Meta Platforms (META)

• Revenue: $42.3 billion (+16% YoY)

• Net Income: $16.6 billion (+35% YoY)

• CapEx: Raised to $64–$72 billion for 2025, largely driven by AI infrastructure investments

AI is driving better engagement and ad performance. But rising infrastructure costs are increasingly in focus.

🎯 AI Stocks on the Watch List

Each week, we screen our universe of 171 AI-related companies for those showing the strongest combination of growth momentum, financial quality, valuation realism, and market leadership. The model is growth-weighted by design, built to highlight names with lasting leadership potential, not just trend followers.

Here are some of the companies meeting our criteria this week: $AVGO ( ▲ 0.68% ) , $PLTR ( ▲ 2.03% ) , $SPOT ( ▲ 6.42% )  

🔍 Looking Ahead

The latest earnings from Microsoft and Meta show that AI investment is no longer just a forward-looking story, it’s starting to show up in the numbers. But with economic growth slowing and capital intensity rising, the market is becoming more selective.

As the next phase of AI plays out, the question isn’t just who’s building AI, it’s who’s turning it into durable performance. Execution is everything.

_{Disclaimer - This content is provided for informational purposes only and does not constitute investment advice, personal recommendations, or an invitation to engage in any investment activity. The information presented is derived from publicly available sources and should not be solely relied upon for making investment decisions. Always consult with a qualified financial professional before making investment choices. Past performance is not a guide to future performance.}

TOP AI STOCKS

TOP AI ETFs

AI STOCKS IDEAS 

Top AI Stocks Poised for Growth - msn

Best Artificial Intelligence Stocks Worth Watching - Marketbeat

3 Cybersecurity Stocks for the Long Term- Yahoo Finance

AI STOCKS & ETFs NEWS 

Should Investors Worry about Nvidia's in China? - The Motley Fool - Nvidia faces challenges in China due to potential U.S. export restrictions and competition from local chipmakers. 

Do Not Rely on Me or Any AI Chatbot for Stock Market Advice, says ChatGPT - Mint - It warns against depending solely on AI chatbots for stock market guidance, emphasizing the need for human judgment alongside AI insights in investment decisions.

Apple Investors Seek Clarity on Tariffs, AI Strategy amid iPhone Sales Decline - Reuters -  Investors are concerned about tariffs on Chinese-made iPhones and Apple's shift in production to India, while focusing on AI strategies as iPhone sales decline ahead of Q2 earnings.

AI STARTUPS

AI's Second Boom: How The Next 24 Months Could Transform Your Portfolio - InvestorPlace - The AI boom is expected to continue shaping investment opportunities over the next two years, with a focus on smaller companies poised for growth amidst market volatility and economic challenges.

In His First 100 Days, Trump's Tariffs are Already Threatening the AI Boom - FastCompany - President Trump's tariffs may disrupt the AI industry by raising costs for critical components like GPUs and processors, jeopardizing supply chains and innovation.

Check out the Pitch Decks 4 Buzzy AI Startups used to Raise $36 Million from Top Investors - Business Insider - Four AI startups raised $35.9 million by utilizing effective pitch decks, emphasizing the importance of compelling storytelling and strategic vision.

AI TRENDS

AI Adoption could Boost Global GDP by an Additional 15% - PWC - A PwC study indicates that adopting AI could enhance global GDP significantly, potentially adding 15 percentage points by 2035.

The Year the Frontier Firm is Born - Microsoft - Microsoft’s report indicates 2025 will see the rise of Frontier Firms, emphasizing human-AI collaboration and strategic reinvention, especially among small and medium businesses.

OTHER

The Top 10 Enterprise Generative AI Applications - SocialMediaToday -  Generative AI enhances enterprise efficiency through applications such as content creation, supply chain optimization, and risk assessment, transforming business operations across various sectors.

Tired of Chatbots? Here's How They Could Improve - Wharton - Strategies from Wharton emphasize designing AI chatbots that align with human psychology to enhance user trust and interaction. Recommendations include optimizing conversation flows and ensuring transparency in capabilities.

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_{Disclaimer - The information contained on this newsletter does not constitute investment advice or a personal recommendation, nor is it an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investments, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all. The information presented is based on publicly available data and sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Market conditions can change rapidly, and the information provided may no longer be up to date. This content is for informational purposes only and should not be construed as financial, legal, or tax advice. Data sources: S&P Global Market Intelligence}