These days, it seems everyone is worried about an inflationary bust. Many expect that over the next few months, inflation will reheat and push an already-fragile U.S. economy into recession.
But I think the opposite will happen. Instead, I’m calling for a disinflationary boom wherein stocks soar throughout the summer.
And it’s all thanks to AI.
You may be skeptical – and that’s fair enough. But follow me here.
Everyone is buying AI chips in bulk these days. We know as much from Nvidia’s (NVDA) recent quarterly earnings report. The company reported $22.6 billion in Data Center revenue last quarter, which is basically its AI chips business. In the same quarter a year ago, Nvidia reported just $4.3 billion in Data Center revenue.
In other words, Nvidia is basically selling 5X as many AI chips right now as it was just a year ago.
And that number should keep going up. Nvidia’s Data Center revenues are expected to grow to $24.5 billion this quarter, $27 billion next quarter, $30 billion the quarter after that, then $32 billion, and so on and so forth to nearly $40 billion in quarterly revenue by late 2025.
The world’s largest companies are on an AI chip buying frenzy right now – and it isn’t expected to slow down anytime soon.
So, here’s the billion-dollar question: What are those companies going to do with all those chips?
Disinflation Will Send AI Stocks Flying
Microsoft (MSFT), Amazon (AMZN), Apple (AAPL), Meta (META), Alphabet (GOOGL). They’re all major buyers of Nvidia’s AI chips right now. And what will they do with all those chips in the next few years?
They’ll build AI applications, products, and services on top of them. In other words, today’s AI chip buying frenzy sets the stage for an AI application boom over the next few years.
And if you recall, what is artificial intelligence supposed to be really good at? Why does every company want to invest in this tech?
AI applications have the potential to dramatically improve companies’ productivity and efficiency. With this tech, businesses can achieve far more output with far less input (because next-gen AI will be doing all the heavy lifting).
To that end, the coming AI application development frenzy should lead to widespread adoption of high-quality AI products and services. And collectively, they could significantly improve economic productivity.
That means that right now, we’re sitting on the cusp of a productivity boom…
Which means we’re also sitting on the cusp of a disinflation boom, too.
The Final Word
When productivity goes up, inflation goes down.
That’s because when companies can achieve more output with less input, the supply of those goods and services increases significantly. And when supply increases significantly – and demand for those goods and services remains relatively constant – their prices go down.
It’s simple supply/demand economics.
Therefore, I strongly believe that, instead of an inflationary bust, the U.S. economy is primed for a disinflationary boom over the next few months.
If I’m right, then the U.S. stock market will explode higher this summer.
And AI stocks should lead the way.
That’s exactly why I’m pounding the table on a select group of AI stocks right now. They’re the stocks that I think investors should be loading up on before the summer.
Uncover all the details about those potential winners.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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