Happy Sunday.
A week ago the market gave us a little scare. The S&P 500 had its biggest down day of the year — dropped nearly 3% in a single session.
My inbox lit up.
People wanted to know if it was over.
So I want to address the question I keep getting, the one that comes in every single week now, no matter what the market does.
The Simple Answer
The bull market ends when the Mag 7 stops spending.
That’s it.
Right now, these seven companies have committed to roughly $680 billion in capital expenditures this year — almost all of it going to AI infrastructure.
Data centers.
Semiconductors.
Networking equipment.
Custom chips.
Amazon alone is spending $200 billion. Alphabet guided for $180 billion. Meta is pouring in $125 billion. Microsoft is on pace for $144 billion.
Goldman Sachs estimates that annual AI capex will hit $765 billion in 2026 and grow to $1.6 trillion by 2031.
McKinsey projects $7 trillion in total data center investment by the end of the decade.
That is a staggering amount of fuel being pumped into this economy.
And based on everything I’ve been reading in their earnings calls and build-out plans, these companies have at least another year to two years of massive construction ahead of them.
AI is exerting a stronger upward gravitational pull on this market than any of the headwinds — the Iran conflict, sticky inflation, rising oil — are pulling it down.
AI is winning that tug of war. Clearly.
What Could Stop It?
Two things.
First: the Mag 7 fundamentally stops spending.
That’s not happening anytime soon.
Every major hyperscaler just raised their capex guidance.
Not one has pulled back.
Second: the Fed starts raising interest rates again.
On the Fed — Kevin Warsh chairs his very first FOMC meeting this week. Rates are sitting at 3.50% to 3.75%. Inflation is still running at 3.8%, nearly double the 2% target.
There is enormous pressure on him from both sides.
The White House wants rate cuts.
The bond market is now pricing in a possible rate hike before year-end.
Goldman Sachs just scrapped their forecast for a 2026 rate cut entirely.
My read?
Warsh is going to sit on his hands.
He’s a smart guy walking into a political minefield.
No new Fed chairman makes a dramatic move in his very first meeting with inflation still elevated and an economy that’s holding up better than anyone expected.
So realistically, we’re looking at several months of relatively stable monetary policy. The worst-case scenario — an actual rate hike — is a tail risk, not a base case.
And of course, geopolitics — Iran, oil — can change the picture at any time.
But right now, the bull market has a runway.
What I Learned in the Dot-Com Era
Here’s the other thing I wanted to share, because I see a lot of members asking whether they should sell what they own and chase the next hot stock.
When I was in my twenties, I was always looking for action.
I’d see a stock moving, buy it, flip out of it, buy the next one.
I was churning my account over and over.
I felt like I was doing something.
I wasn’t.
What I learned — looking back at all that activity — is that the real money in a bull market is made in the waiting.
Not the trading.
The waiting.
You have your core positions — the ones you understand, the ones you got into at a good price, the ones you believe in.
And then you just hold them.
That’s how big money gets made in a bull market.
The S&P is up 10% this year already. It’s the fourth straight year of double-digit returns.
The people making the most money right now aren’t the ones trading every dip — they’re the ones who picked their spots and stayed put.
If you’re thinking about dumping your wife of 50 years for the new piece of action that just walked by — believe me, that doesn’t look good over time.
It might feel exciting in the short term.
It’s not the smart long-term play.
We all know this. The great thing about getting older is you actually start to act on it.
See you next week.
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Written by Dylan Jovine