Anthropic revenue jumps 14x; AI stock flows strengthen

AI Gets Even Hotter Please click here for an enlarged chart of Invesco QQQ Trust Series 1 (NASDAQ: QQQ ).

Note the following: The chart shows QQQ is approaching the low band of zone 1 (resistance).

Of note is that S&P 500 has broken to new highs but Nasdaq 100 has not.

In our analysis, how the divergence between S&P 500 and Nasdaq 100 resolves will be important.

The stock market is positioned for the divergence to be resolved by QQQ breaking to a new high.

Think of market positioning at this time as everyone being on one side of the boat.

The equivalent of a storm would be if the divergence is resolved by S&P 500 pulling back instead of Nasdaq 100 breaking out.

The chart shows RSI is pulling back.

Anthropic revenue increased 14x in Q2 from a year ago to $11.5B.

This is generating significant buying in the AI trade in the premarket.

On the flip side, a highly detailed report from The WSJ estimates that nine major tech companies have about $3 triliion in off-balance-sheet commitments, mostly for AI infrastructure.

Bears are hanging their hats on the $3 trillion in off- balance-sheet commitments.

In our analysis, these commitments are a double edged sword and not necessarily bearish.

If demand meets or exceeds expectations, these commitments can drive tremendous growth for the nine companies and, in turn, drive the stock market much higher than you might think.

If demand falls short of expectations, there will be overcapacity, and the stock market can easily correct 30% — 50%.

Bears are also hanging their hats on a new Chinese AI system that can write and optimize CUDA code better than senior software engineers.

CUDA is the software ecosystem from Nvidia (NVDA) that has been a big part of Nvidia’s moat.

Some bears are going to the extreme, saying Nvidia is finished.

In our analysis, prudent investors should think of this development merely as a crack in Nvidia’s moat.

In the near term, Nvidia will also benefit from AI models writing great CUDA code for Nvidia GPUs.

However, in the longer term, there is a risk that AI can optimize software for chips from Alphabet Inc Class A (NASDAQ: GOOGL ), Advanced Micro Devices Inc (NASDAQ: AMD ), and others, posing a challenge to Nvidia.

Nvidia appears to be partially backtracking on a guarantee for a $250B OpenAI data center.

In our analysis, prudent investors should note the foregoing as crosscurrents that are natural at this stage of the AI revolution.

Many more developments are ahead — some will be positive for AI stocks while others will be negative.

Tempering the aggressive buying by the momo crowd in the early trade is selling due to rising yields.

Earnings from retailers Walmart Inc (NASDAQ: WMT ), Target Corp (NYSE: TGT ), Home Depot Inc (NYSE: HD ), and Lowe’s Companies Inc (NYSE: LOW ) are ahead.

This earnings will give a good picture of how the consumer is doing.

FOMC minutes will be released on August 19.

Magnificent Seven Money Flows Most portfolios are now heavily concentrated in the Mag 7 stocks.

For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis.

In the early trade, money flows are positive in Amazon.com, Inc. (NASDAQ: AMZN ), NVIDIA Corp (NASDAQ: NVDA ), and Alphabet Inc Class C (NASDAQ: GOOG ).

In the early trade, money flows are neutral in Apple Inc (NASDAQ: AAPL ).

In the early trade, money flows are negative in Meta Platforms Inc (NASDAQ: META ), Microsoft Corp (NASDAQ: MSFT ), and Tesla Inc (NASDAQ: TSLA ).

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (NYSE: SPY ) and Nasdaq 100 ETF (QQQ).

Momo Crowd And Smart Money In Stocks Investors can gain an edge by knowing money flows in SPY and QQQ.

Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.