Warren Pies

Pies notes that Hyperscalers are ramping capex to nearly $700 billion in 2026. He states, "Hardware semis needs to be bid... compute is the thing that everyone is scrambling for." While software (SaaS) faces an existential threat from AI coding capabilities, the physical infrastructure required to run that AI (chips/hardware) is seeing unprecedented demand. The massive capex spend must flow directly into the revenues of semiconductor and hardware manufacturers. LONG. The "industrial revolution" of AI requires physical compute, making hardware the primary beneficiary of the capex boom. If hyperscalers suddenly cut capex due to lack of ROI, the hardware sector would collapse.

Pies argues that the ideal portfolio hedge has shifted from bonds to commodities. He states, "When disruption is the risk, own that which cannot be disrupted." AI threatens intellectual property and code (Software), but it cannot replicate physical atoms. Furthermore, the data center buildout requires massive amounts of energy (Oil/Gas) and industrial metals (Copper). Simultaneously, the "debasement regime" (high deficits) supports precious metals (Gold/Silver). LONG. Commodities act as both an inflation hedge and a "technological disruption" hedge. A sharp economic recession would crush demand for industrial commodities (Oil/Copper) regardless of the AI thesis.

The spread between semiconductors and software represents the market's belief in AI. Until software's role in the AI ecosystem is settled, being long semiconductors and short software captures the compute-demand upside while hedging disruption risk. The Mythos model and GPU scarcity validate this trade.

The stock market (S&P 500) is supported by an unprecedented earnings boom driven by AI capex, fiscal stimulus, and a resilient economy. Earnings estimates are rising vertically, and the AI revolution is powerful enough to override the oil crisis from the Strait of Hormuz closure.

Energy equities are structurally overweight as a portfolio diversifier. They have negative correlation to equities and act as a risk dampener, similar to bonds. This positioning has helped the RAA fund through recent volatility.

"When we downgraded stocks a few weeks ago we upgraded bonds. And this was really the big reason... Overnight rates market is slowly pushing more cuts into the cycle... ultimately drags the ten year down." AI adoption is acting as a deflationary force by hollowing out white-collar labor and slowing hiring. A softer labor market forces the Federal Reserve to cut rates more aggressively and for longer (into 2027) to support the economy. Lower yields equal higher bond prices. LONG government duration as a hedge against AI-driven labor weakness and disinflation. AI adoption leads to a productivity boom that accelerates growth and inflation (Doomsday scenario vs. Productivity boom), causing yields to spike.

"When we downgraded stocks a few weeks ago we upgraded bonds. And this was really the big reason... Overnight rates market is slowly pushing more cuts into the cycle... ultimately drags the ten year down." AI adoption is acting as a deflationary force by hollowing out white-collar labor and slowing hiring. A softer labor market forces the Federal Reserve to cut rates more aggressively and for longer (into 2027) to support the economy. Lower yields equal higher bond prices. LONG government duration as a hedge against AI-driven labor weakness and disinflation. AI adoption leads to a productivity boom that accelerates growth and inflation (Doomsday scenario vs. Productivity boom), causing yields to spike.

Pies notes that Hyperscalers are ramping capex to nearly $700 billion in 2026. He states, "Hardware semis needs to be bid... compute is the thing that everyone is scrambling for." While software (SaaS) faces an existential threat from AI coding capabilities, the physical infrastructure required to run that AI (chips/hardware) is seeing unprecedented demand. The massive capex spend must flow directly into the revenues of semiconductor and hardware manufacturers. LONG. The "industrial revolution" of AI requires physical compute, making hardware the primary beneficiary of the capex boom. If hyperscalers suddenly cut capex due to lack of ROI, the hardware sector would collapse.

Pies argues that the ideal portfolio hedge has shifted from bonds to commodities. He states, "When disruption is the risk, own that which cannot be disrupted." AI threatens intellectual property and code (Software), but it cannot replicate physical atoms. Furthermore, the data center buildout requires massive amounts of energy (Oil/Gas) and industrial metals (Copper). Simultaneously, the "debasement regime" (high deficits) supports precious metals (Gold/Silver). LONG. Commodities act as both an inflation hedge and a "technological disruption" hedge. A sharp economic recession would crush demand for industrial commodities (Oil/Copper) regardless of the AI thesis.

Pies argues that the ideal portfolio hedge has shifted from bonds to commodities. He states, "When disruption is the risk, own that which cannot be disrupted." AI threatens intellectual property and code (Software), but it cannot replicate physical atoms. Furthermore, the data center buildout requires massive amounts of energy (Oil/Gas) and industrial metals (Copper). Simultaneously, the "debasement regime" (high deficits) supports precious metals (Gold/Silver). LONG. Commodities act as both an inflation hedge and a "technological disruption" hedge. A sharp economic recession would crush demand for industrial commodities (Oil/Copper) regardless of the AI thesis.

Pies argues that the ideal portfolio hedge has shifted from bonds to commodities. He states, "When disruption is the risk, own that which cannot be disrupted." AI threatens intellectual property and code (Software), but it cannot replicate physical atoms. Furthermore, the data center buildout requires massive amounts of energy (Oil/Gas) and industrial metals (Copper). Simultaneously, the "debasement regime" (high deficits) supports precious metals (Gold/Silver). LONG. Commodities act as both an inflation hedge and a "technological disruption" hedge. A sharp economic recession would crush demand for industrial commodities (Oil/Copper) regardless of the AI thesis.

Pies notes that Hyperscalers are ramping capex to nearly $700 billion in 2026. He states, "Hardware semis needs to be bid... compute is the thing that everyone is scrambling for." While software (SaaS) faces an existential threat from AI coding capabilities, the physical infrastructure required to run that AI (chips/hardware) is seeing unprecedented demand. The massive capex spend must flow directly into the revenues of semiconductor and hardware manufacturers. LONG. The "industrial revolution" of AI requires physical compute, making hardware the primary beneficiary of the capex boom. If hyperscalers suddenly cut capex due to lack of ROI, the hardware sector would collapse.

Pies argues that the ideal portfolio hedge has shifted from bonds to commodities. He states, "When disruption is the risk, own that which cannot be disrupted." AI threatens intellectual property and code (Software), but it cannot replicate physical atoms. Furthermore, the data center buildout requires massive amounts of energy (Oil/Gas) and industrial metals (Copper). Simultaneously, the "debasement regime" (high deficits) supports precious metals (Gold/Silver). LONG. Commodities act as both an inflation hedge and a "technological disruption" hedge. A sharp economic recession would crush demand for industrial commodities (Oil/Copper) regardless of the AI thesis.