Dear Fellow Investor,
Good morning. Happy Wednesday.
What a great day it is to be alive.
This week, President Xi Jinping is in town for a summit with President Trump.
But the vibe both sides are putting out is the same:
Stability and peace.
I don't expect fireworks at this meeting.
But I'll tell you this — if Trump announces a major arms sale to Taiwan right after the summit concludes, that's your signal the meeting did not go well.
That would be a significant rupture. We'll see.
THE REAL REASON BOTH SIDES WANT PEACE RIGHT NOW
Both the U.S. and China want stability for one reason above all others.
Each side is racing to win the AI competition.
Both understand that whoever controls AI becomes the dominant world power.
And when you are focused on raising capital, spending, building infrastructure, you want peace and stability. World War III is not going to push the AI race ahead.
For the U.S., winning cements our position.
For China, winning replaces us.
That's not a hunch — that is Xi Jinping's stated goal, repeated many times.
THE SCOREBOARD: U.S. VS. CHINA
U.S. hyperscalers are investing $1 trillion in AI this year.
China's hyperscalers are expected to invest $123 billion.
That's eight dollars for every one dollar China puts in.
But the two sides aren't just spending differently — they're pursuing completely different strategies.
TWO VERY DIFFERENT APPROACHES
The U.S. strategy is a frontier model scale approach.
We're chasing artificial general intelligence — the kind of reasoning machine that can think through genuinely new problems.
To get there, we're making massive investments in custom silicon, enormous data centers, and power infrastructure.
The risk, as we've discussed many times, is whether the return on that capital justifies the investment.
China is taking the opposite approach.
Their strategy is cost optimization — a low-cost entrant focused on industrial and economic applications.
Their biggest constraint is chip export controls, which both the Trump and
Biden administrations have maintained.
China cannot legally access the most advanced semiconductors Nvidia and others produce.
I support that policy completely.
You don't hand your biggest technological advantage to a rival.
Despite that constraint, China has found ways to deliver near-comparable
AI performance at dramatically lower cost.
They appear to have built something closer to a high-speed search indexing function — where answers are largely pre-loaded and the machine pulls from them quickly — rather than the deeper, slower reasoning process our models use.
Different approaches. Different trade-offs.
Theirs is cheaper. Ours reasons better.
WHY AMERICA'S CAPITAL MARKETS ARE THE DECISIVE ADVANTAGE
At its core, this AI race is a competition between two very different economic systems.
China's is largely state-controlled.
Xi Jinping tells his national champions which direction to go, and they go.
America's system runs on private capital allocation.
Entrepreneurs find the opportunity, and money floods in behind them.
I believe the depth and sophistication of America's capital markets is our single greatest competitive advantage.
History backs this up.
Britain defeated Napoleon not primarily through military genius, but through the staying power of its capital markets and public credit system.
France financed its wars through conquest — take a country, take their gold, fund the next campaign.
It never works as well as deep capital markets. Never.
The Dutch held their own against France — a tiny country against a massive one — because of their advanced financial system.
When England brought in William and Mary during the Protestant Reformation, it also adopted the Dutch financial market system.
New York was New Amsterdam first. The Dutch were the original traders.
Capital markets have been the decisive factor in great power competition for centuries.
And right now, they're being flexed like never before.
SINGAPORE'S ELDER STATESMAN SAID IT BEST
Before Xi Jinping rose to power, he met with Singapore's legendary statesman Lee Kuan Yew.
Xi told him China would become the number one country because it had a billion people versus America's 300 million.
Kuan Yew — who had seen everything — replied:
"You underestimate the United States. They have 300 million people, but they can access the capital and the brains of eight billion people around the world."
That is exactly what we're watching right now.
When the Magnificent Seven raises $50 billion or $100 billion in debt to fund the AI build-out, who buys it?
American investors, yes — but also Middle Eastern sovereign funds, European institutions, and capital from every corner of the globe.
We are pulling the world's money into this race.
That's why I think we're going to win.
And that’s why I designed the precise investing playbook for this race.
You can download your copy here.
Have a wonderful Wednesday. I'll see you tomorrow.
“The Buck Stops Here,”
P.S. After meeting with the U.S. Congressmen who architect our nation’s financial wars, I discovered one stock positioned for up to 7,000% gains as this situation plays out. Go here now for the ticker >>>
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Written by Dylan Jovine