Turnaround Wednesday

The đŸ”„H.E.A.T.đŸ”„ Formula : AI Driven Insights to Spark Your Portfolio

Author

Matthew Tuttle
May 01, 2025

In Today’s Issue:

  • Turnaround Wednesday

  • AI infrastructure watchlist

  • The SPAC opportunity in 2025

  • Microsoft increasing data center capacity in Europe

  • Trump 2.0, the first 100 days and what it means for stocks and sectors

  • and more

..

Bottom Line: Yesterday’s reversal was probably based on potential talks with China and some data that suggested GDP wasn’t that bad. After hours earnings from META and MSFT could be a game changer for AI. Still cautious, but adding to AI infrastructure.

ETF Model Portfolio Changes

We are bringing TBIL down to 25% and adding SPCX at a 5% weighting. Things are starting to move again in the SPAC market. More information here
..

Fund Info

www.spcxetf.com

Next Webinar:

Tariffs, Inflation, and Recession: What To Do Now

5/22 2pm EST

GoTo Webinar

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News & Noise

🧠 News:

Tesla denies report it’s initiated CEO search for Elon Musk’s successor

Tesla Inc.’s board of directors took steps toward finding Chief Executive Elon Musk’s successor earlier this month, as the EV maker’s stock sank while Musk prioritized his DOGE efforts, according to a new report.

www.marketwatch.com/story/teslas-board-reportedly-initiated-ceo-search-for-elon-musks-successor-5e91988c?mod=home_lead

❌ Noise:

What Wall Street Is Saying

Jonathan Krinsky, BTIG



After being down nearly 14% for the month at the April 7th intraday low, the S&P 500 has the potential to close the month green, something that would be unprecedented in the modern era. While a recovery feels much better than the alternative, it leaves the index back to a difficult level heading into May, and with the index up six straight days. We continue to view the SPX as rangebound, and with it into the upper end of the range, we would be fading it here as we head into May.

Levels. We have been discussing the 5571 gap which filled yesterday. Above that the declining 50 DMA comes in at 5613, and there is a lot of residual supply in the 5600-5750 level from the March trading range. The unfilled gap is now lower at 5309, and we think that is likely the next level to get tested.

Breadth. 85% of S&P components are above their 10 DMA, the highest since January. Yet just 37% of components are above their 200 DMA, suggesting short-term overbought amidst long-term downtrends. While this is how new bull markets start, we also see it at the tail ends of counter-trend rallies. We think it's more likely the latter.

Sentiment. 5 DMA of the Composite put/call ratios have been pulling back. Equity is bumping along the lowest levels of the year.

Dollar. Despite a strong rally in equities and bonds, the dollar has struggled. At some point correlations break, but this is curious given they all moved down together in March/April.

Gold. Finally looks to be cracking after the blowoff move into 3500. We continue to see downside risk here, and the set-up is there for gold to move lower with stocks into May. We see minimum downside risk towards the 3k level, but with a possible move back to its 200 DMA (2742).

Turnaround Wednesday

Yesterday I talked about how the market was looking a bit toppy after being up 6 days in a row. Pre market things were weak, then we got the negative GDP number and the market sold off. Then the market had a furious rally throughout the day to close SPY green. This could have been based on more chatter about talking to China, but it also could be this
.

The contraction was driven almost entirely by a surge in imports. That widened the trade deficit and dragged down net exports, a standard but misleading quirk of GDP math. Real final sales to domestic private purchasers—a much cleaner read on U.S. demand—rose at a healthy clip. That’s a far better measure of momentum than the top-line GDP figure.

The inflation news was even better. The Fed’s preferred gauge, the PCE price index, was flat in March. Zero. Core PCE, which excludes food and energy, was also unchanged. That’s the tamest monthly reading since early 2020. Year-over-year, headline PCE slowed to 2.3 percent, and core PCE dropped to 2.6 percent.

Put it all together, and the first-quarter contraction looks less like the start of a downturn and more like a statistical mirage. Underneath the noise, the fundamentals are strong: real demand is up, incomes are growing, prices are stable, and businesses are preparing for more.

-Bear Traps Report

After hours is when it got even more interesting as MSFT and META both talked capex and AI demand
.

This could be a game changer IMHO. I still don’t entirely trust this market, we still don’t have a trade deal with China, and we may be in a recession. While the GDP report may be better than the numbers show (see above), there are still concerns


"This makes no sense.  This was front running expected price increases.  There will be payback for this.  Just as imports surged ahead of tariffs, as discussed above, they are presently collapsing.  Whoever says this has not talked to a single CEO."

"It’s going to take a couple more months before the weak soft data (PMI ISM / + regional Fed ugly surveys) turns into weak hard data. I was talking to a clothing importer yesterday.  He said his business is falling apart
.but we won’t see it in the stores until August."

-Bear Traps Report

Markets focus is likely to shift to the economy and the macro impact from tariff policies. Our view has been that we are unlikely to see the tariff impact on the macro data before the second half of May. But as we move towards end May/June, we could see a noticeable weakening of the economic data and would become the dominant worry for the markets.

-Mohit Kumar, Jefferies

We also still have some important earnings, tonight is AAPL and AMZN and NVDA is 5/28. Jobs on Friday could also be significant. However, my concern after the DeepSeek announcement wasn’t that anything they said was true, it was that it would be the pin that popped the AI bubble because it would cause investors to ask some uncomfortable questions, which happened. Any bubble once popped though will eventually reflate. I already have AI infrastructure stocks and will look to add to those positions and some others, I’ll probably add slowly over the next few days as we are still due for an ugly selloff at some point. I had GPT put together a quick watchlist
..

The AI Infrastructure Watchlist
Your roadmap to the backbone of the AI boom—data centers, chips, networking, power and beyond.

Jensen Huang’s GTC pronouncement that AI data-center capex will hit $1 trillion by 2030 underscores a seismic shift: the race isn’t just about models and apps, it’s about the raw plumbing that makes them possible. MSFT and META’s recent revelations of surging AI demand and accelerating capex confirm it. Below, I rank 10 pure-play and adjacent stocks—data centers, semis, networking, power utilities—on a 1–10 scale for their ability to capture this wave.

Rank

Ticker

Company

Exposure & Rationale

10

NVDA

Nvidia

AI’s “Intel”: GPUs and now inference software. Near-monopoly on AI accelerators. Every data center needs them.

9

MSFT

Microsoft

AI Fabric Owner: Azure AI capex leader, owns the cloud stack and now partner on self-driving robotics.

8

AMZN

Amazon

Data Center Kingpin: AWS’s AI-optimized Trainium/Inferentia chips plus massive hyperscale footprint.

7

EQIX

Equinix

Global Interconnect Hub: Carrier-neutral data centers with rich ecosystems, a critical choke-point for AI volumes.

7

DLR

Digital Realty

Hyperscaler Friend: Immune to software cycles; expanding capacity where AI clouds live.

6

ANET

Arista Networks

High-speed Spine & Leaf: AI demands ultra-low-latency fabrics; Arista’s 400 GbE/800 GbE roadmap is crucial.

6

CIEN

Ciena

Optical Backbone: AI clusters need massive east-west capacity—Ciena’s routing and optical gear underpin it.

6

NEE

NextEra Energy

Clean Power Provider: AI data centers guzzle power; renewables plus grid stability right-size baseload.

5

ETN

Eaton

Power Management & UPS: Ensuring uptime for mission-critical AI farms with grid support and backup solutions.

5

AES

The AES Corp

Distributed Energy & Storage: Microgrids, battery storage and peaking plants to buttress AI loads at the edge.

Why These Names?

  1. Semiconductors & Compute (Ranks 10–8)

    • Nvidia (10/10): Absolute leverage to every inference and training cycle. Its new “Quantum-X” networking and Dynamo inference stack only deepen its moat.

    • Microsoft (9/10) & Amazon (8/10): Beyond buying GPUs, they build proprietary AI chips and cloud services—owning both hardware and software.

  2. Data Centers & Interconnect (Ranks 7–6)

    • Equinix & Digital Realty (7/10): As “digital landlords,” they lock in long-term leases to hyperscalers and enterprises deploying AI clusters.

    • Arista & Ciena (6/10): Every AI training job spins up thousands of GPUs across racks; they need blistering network backplanes and optical trunks to sync them.

  3. Power & Distribution (Ranks 6–5)

    • NextEra (6/10): AI farms demand clean, reliable, and scalable power. Renewable PPAs and grid modernization make NextEra a natural supplier.

    • Eaton & AES (5/10): From UPS systems to on-site storage/microgrids, these keep the lights on—and the servers humming—when margins are measured in milliseconds of downtime.

Implications for U.S. vs. China Stocks

  • U.S. Winners: These names capture both domestic capex and China-driven expansion (until export controls bite).

  • Chinese Threat: Home-grown AI players (e.g., Huawei’s HiSilicon successors) may spur catch-up spend—but quality and scale advantages keep U.S. infrastructure in the lead for now.

Key Takeaway

AI’s growth is no longer confined to algorithms—it’s an industrial revolution in compute, data centers, networking, and power. Position yourself in the physical layer of AI’s architecture, not just the software hype. These 10 picks form the AI Infrastructure Watchlist, offering both durable revenue streams and massive secular upside as the world builds the “AI factories” of tomorrow.

The SPAC Opportunity in 2025


TD Cowen put out this report yesterday, something I have just started talking about. Here are the highlights
..

Rebirth of SPAC Issuance

  • The past 12 months have seen a rebirth in SPAC issuance – over 80 IPOs for $16 billion of trust capital, with almost $6 billion of that coming in 2025 alone. This is up from 25 SPAC IPOs raised for $3 billion in proceeds in the preceding 12 months.

  • The pipeline suggests that issuance will remain active, with ~$6 billion filed but not yet priced, of which over $2 billion was filed in April alone.

 SPAC Return Profile

  • SPACs offer investors money market yields at a discount as their downside. In recent months, the space has seen the return of equity upside in names such as CCIR, which led by serial sponsor Betsy Cohen announced a proposed merger with Kyivstar, the leading digital operator in Ukraine. Investors in the IPO have seen a 54% annualized return to date.

  • In the current market environment, investing in SPACs has not only provided a safe haven for investors, but also has represented a superior return profile.

Fund Info-SPCX

The SPAC and New Issue ETF

www.spcxetf.com

This obviously caught my eye. I’ve been very US centric in my AI investment and analysis. DeepSeek got me thinking about China and names like BABA, BIDU, and GDS. Now perhaps Europe gets more interesting. I had GPT take a deep dive



Last night, Microsoft President Brad Smith dropped a bombshell: over the next two years Azure’s European data-center capacity will grow by 40%. This isn’t just another incremental build—it's a strategic pivot with cascading effects across the technology, real-estate, and infrastructure landscapes. Below, I unpack the macro forces at play, identify the U.S.–traded beneficiaries (and a few potential laggards), and rate each on a 1–10 “expansion‐opportunity” scale .

1. Why Europe Matters Now

  • Digital Sovereignty & Regulation: The EU’s GDPR, Digital Markets Act, and GAIA-X initiative have driven hyperscalers to localize infrastructure. Microsoft’s pledge signals a fight for market share in a jurisdiction that prizes data residency.

  • AI & Cloud Demand Surge: ChatGPT-era workloads are exploding. Europe’s enterprises—banks, automakers, healthcare—are shifting from on-premises to public-cloud AI, fueling hyperscale growth.

  • Energy & Sustainability: European grids are decarbonizing, but power remains expensive and intermittent. Building new data centers requires secured renewable energy contracts and resilient backup solutions.

2. Key Investment Themes

  1. Hyperscale Real-Estate Winners: REITs that own and operate data centers will see leasing velocity and price-per-kW upticks.

  2. Compute & Memory Suppliers: Explosive server demand lifts demand for CPUs, GPUs, DRAM, and SSDs.

  3. Networking & Interconnect: Low-latency, high-bandwidth switches and optics become table stakes.

  4. Power & Cooling Infrastructure: On-site backup, power-distribution gear, and chillers see step-function demand.

  5. Construction & Engineering Services: Turnkey data-center builds will accelerate, benefitting contractors and engineering-procurement outfits.

3. US-Traded Stocks to Own & Their 1–10 Ratings

Name

Ticker

Theme

Rating

Thesis

Equinix Inc.

EQIX

Data-Center REIT

9/10

Europe is now Equinix’s fastest-growing region; a 40% build-out by Azure will drive rack-space demand, pricing power, and new campus developments.

Digital Realty Trust

DLR

Data-Center REIT

8.5/10

Large hyperscale anchor tenancies (including MSFT) underpin committed capacity; DR-Owned acreage in Frankfurt/Amsterdam is primed for expansion.

Nvidia Corp.

NVDA

AI Compute & Accelerators

9/10

40% more Azure capacity means 40% more GPUs; European contracts often lock in multi-year GPU reservations (Hopper/Blackwell) at premium pricing.

Advanced Micro Devices

AMD

CPUs & GPUs

8/10

Gains market share in CPU and GPU segments; EPYC server CPUs and Instinct GPUs will be core to Azure’s server pods.

Intel Corp.

INTC

CPUs & FPGAs

7/10

Despite past execution woes, Intel’s new Xeon lines and Agilex FPGAs could see renewed traction in bulk Azure deployments—especially in EU zones.

Micron Technology

MU

DRAM & NAND

7/10

Hyperscale build-outs translate directly into DRAM and flash consumption; Micron’s European wafer-fab partnerships may secure preferential supply.

Arista Networks

ANET

Networking Switches

8/10

Arista’s 400/800 GbE switches are the backbone of modern data centers; Azure’s scale-out approach in Europe will lean on Arista’s low-power platforms.

Cisco Systems

CSCO

Networking & Security

7/10

Legacy networking incumbent; wins in hybrid cloud edge deployments and security appliances as Azure builds new EU regions.

Ciena Corp.

CIEN

Optical Interconnect

7/10

DWDM and coherent optics demand soars with each new pod; Ciena’s long-haul and metro optics tie campuses to core clouds.

Generac Holdings

GNRC

Backup Power & Gensets

6/10

Data centers require on-site power resilience; Generac’s industrial-scale gensets will see lump-sum orders from MSFT’s EU builds.

Cummins Inc.

CMI

Engines & Backup Systems

6/10

Similarly positioned with large-frame diesel and gas generators; also moving into hybrid-energy storage for grid interplay.

4. Potential Losers & Neutral Plays

  • Legacy Telcos (e.g., Lumen Technologies, LUMN): Face bandwidth price-pressure as cloud providers build their own backbones.

  • Mid-Tier Hosters: Regional colos with less scale may struggle to compete on pricing/power deals.

  • Pure-Play CDN Providers: Risk losing traffic share as Azure integrates front-door edge services into data centers.

5. Regulatory & Execution Risks

  • EU State-Aid Scrutiny: Subsidy-backed builds could face EU competition complaints, delaying launches.

  • Permitting & NIMBY: Europe’s stringent land-use and environmental rules could slow construction timelines.

  • Supply-Chain Bottlenecks: Chassis, switch ASICs, and critical raw materials (copper, silicon) could see lead-time stretch.

6. Conclusion

Microsoft’s 40% European data-center expansion is more than a capacity statement—it’s a strategic claim-stake in Europe’s digital sovereignty, a bullish catalyst for a defined set of U.S. hardware and real-estate plays, and a call to arms for power-infrastructure providers. While incumbents with entrenched scale (Equinix, Nvidia) stand to gain the most, the build-out will have a ripple effect: from semiconductors (DRAM, CPUs, AI accelerators) to optical interconnect and backup-power systems.

Bottom Line:

  • Core “Must-Own”: EQIX, NVDA, DRL

  • High-Conviction: ANET, AMD, DLR

  • Tactical: GNRC, CMI (power resilience)

Europe’s AI & cloud boom won’t stop at capacity—it’s turbocharged demand for the entire data-center ecosystem. Betting on this expansion now crystallizes exposure to a multi-year growth wave, insulated by high barriers to entry and regulatory tailwinds favoring localized cloud sovereignty.

Trump 2.0: The First 100 Days—What It Means for Stocks & Sectors

JP Morgan wrote a long piece about the first 100 days and the future. It’s long, so I had GPT summarize and pick out the stocks and sectors that could be impacted most
..

I. Recap of the First 100 Days
President Trump has wielded extraordinary executive power—issuing 143 Executive Orders—and driven a breakneck “America First” agenda focused on:

  • Trade & Tariffs: 25% on Canada/Mexico; 10% (then 145%) on China → US average tariff rate ≈ 23%, akin to a $730 billion “tax hike” (2.4% GDP).

  • Energy Dominance: Vocal support for oil/gas production, fast-tracking permitting, while markets saw oil slump (Brent down ~22% since January).

  • Deregulation & Dereg: Paused new rules, promising a 1 for 1 EO regiment (pause on Biden’s regs), yet real cuts likely modest and slow.

  • Immigration & Border Security: Ten EOs tightened asylum and birthright rules, driving border encounters to 20-year lows.

  • Fiscal Policy: Tax‐cuts on the back-burner as tariff shock ripples through corporate/CEO confidence; markets now price a 60% chance of recession in the next year.

  • AI & Tech: Reactionary regulation—key export controls on Chinese AI firms—while pushing for domestic chip on-shoring (Chips Act, TSMC $100 B U.S. pledge).

Market Impact:

  • S&P 500: Largest first-100-day loss since 1970s.

  • Treasuries: 10 yr yield range bound but term premium up as debt/GDP fears mount.

  • FX: USD firm, CNY stable—markets expect no full “financial decoupling,” but trade flows are rerouting.

II. What’s Next—Extrapolating the Next 1,000 Days
1. Tariffs & Trade Wars → Winners & Losers

  • Winners:

    • “Onshore” Industrials & Machinery (Caterpillar (CAT) +, Dover (DOV)).

    • Domestic Steel & Aluminum (Nucor (NUE), U.S. Steel (X)) on sustained 25% import duties.

    • Defense & Aerospace—billed as “national security”: Lockheed (LMT), Raytheon (RTX).

  • Losers:

    • Auto Parts & Consumer Electronics reliant on Mexico/China (Lear (LEA), Flex (FLEX)).

    • Retailers facing higher COGS (Best Buy (BBY), Target (TGT)).

2. Energy Pivot → “Domestication” & Price Floors

  • Winners:

    • U.S. Shale Producers (EOG Energy, Occidental (OXY)): regulatory roll-backs and faster leasing → breakeven oil ~$45 bbl.

    • Coal & Nat Gas: Trump’s anti-CO₂ regs unwinding helps natural gas names (Cheniere (CLH), EQT (EQT)) and depressed coal stocks (Peabody (BTU), Arch (ARCH) bottoming).

  • Losers:

    • Renewables (First Solar (FSLR), Vestas ADR (VWS)): subsidies uncertain, permitting may slow.

    • Integrated Majors (BP, Shell) with large upstream exposure and greener transition narratives.

3. Fiscal & Monetary Crosswinds

  • Winners:

    • Regional Banks (PNC, Fifth Third (FITB)): steeper yield curves (10 yr > 4.5%) boost net interest margins.

    • Inflation-Hedges: Commodities via ETFs (DBC), TIPS (TMF).

  • Losers:

    • High-duration Growth (Netflix (NFLX), Zoom (ZM)): higher real yields pressure discounted cash flows.

    • REITs: mortgage REITs (Annaly (NLY)) hit by yield volatility.

4. Energy & AI Collide

  • AI Data‐Center Build → Power Demand Surge

    • Winners: Grid & utility names (NextEra (NEE), Duke (DUK)); Nuclear (Constellation (CEG), Vistra (VST)): major tech pledges (Amazon, Google, Meta) just signed to triple nuclear capacity by 2050.

    • Losers: Small LDCs/“behind‐the‐meter” (Enphase (ENPH)) whose solar+storage sees less need if baseload nuclear grows.

5. AI & Semis—Regulation vs. Growth

  • Winners:

    • Domestic Chipmakers (Nvidia (NVDA), AMD (AMD), Intel (INTC) if it ramps foundry).

    • Memory: Micron (MU) on push for U.S.-based HBM production.

  • Losers:

    • Chinese ADRs under export curbs (Baidu (BIDU), Tencent ADR (TCEHY))—although a 1–2 billion USD “crypto reserve” executive order suggests selective U.S. friendliness in tech.

    • Equip Makers lacking U.S. footprint: Lam Research (LRCX) faces potential U.S. production incentives bias.

III. Macro Odds & Investment Themes

Policy & Risk

Success Likelihood

Sustaining 23% tariffs

7/10

Passing major tax cuts + reconciliation

5/10

Deregulation yield outpacing tariff drag

4/10

AI export controls → U.S. on-shoring chips

8/10

Nuclear capacity tripling by 2050

6/10

DeepSeek Redux?
Just as DeepSeek’s surprise LLM shook chip forecasts, Trump’s “Liberation Day” tariffs shocked markets. The parallels: sudden policy shocks → knee-jerk repricing → eventual rotation back into AI, energy, defense, and financials. We rate the odds of a “DeepSeek-style” shock from China (e.g., new AI, trade realignment) at 6/10—enough to warrant hedging.

IV. Portfolio Actionables

  1. Buy

    • Defense Primes & SMEs: LMT (“America First” spends), KTOS/MRCY (tech niches).

    • Energy—Traditional & AI-Power: EOG, OXY, CEG, NEE.

    • Banks & Insurance: PNC, Fidelity Nat’l Info (FIS), Berkshire Hathaway (BRKB) for P&C tailwinds in higher rates & natural catastrophe inflation.

  2. Trim

    • Tariff-Exposed Industrials: LEA, FLEX, BBY.

    • Duration-Rich Growth: ZM, NFLX.

  3. Watch List

    • Coal Turnaround: BTU, ARCH—valuations at multi-decade lows, dividend yields > 8%.

    • Nuclear Enablers: GE Vernova (GEV), Oklo (private watch), Holtec Intl (HLTEQ).

    • Quantum & Robotics: upcoming PhD-level dives pending GTC announcements.

Bottom Line:
Trump’s first 100 days have injected policy volatility—tariffs, energy pivots, deregulation promises—that is unlikely to fully unwind soon.
Defense, traditional energy (oil, gas, nuclear), and financials stand out as secular beneficiaries, while high-multiple tariff-exposed and long-duration tech names face headwinds.
Staying nimble, we buy the policy “winners” on dips, hedge against further trade shocks, and diversify into energy-infrastructure plays powering the AI juggernaut.

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    The views and opinions expressed herein are those of the Chief Executive Officer and Portfolio Manager for Tuttle Capital Management (TCM) and are subject to change without notice. The data and information provided is derived from sources deemed to be reliable but we cannot guarantee its accuracy. Investing in securities is subject to risk including the possible loss of principal. Trade notifications are for informational purposes only. TCM offers fully transparent ETFs and provides trade information for all actively managed ETFs. TCM's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. Trade notification files are not provided until full trade execution at the end of a trading day. The time stamp of the email is the time of file upload and not necessarily the exact time of the trades. TCM is not a commodity trading advisor and content provided regarding commodity interests is for informational purposes only and should not be construed as a recommendation. Investment recommendations for any securities or product may be made only after a comprehensive suitability review of the investor’s financial situation.© 2025 Tuttle Capital Management, LLC (TCM). TCM is a SEC-Registered Investment Adviser. All rights reserved.