A Complicated Future for Stocks

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, A Complicated Future for Stocks The future has been complicated further after last Friday’s blockbuster jobs report. In the past, a strong jobs report would be wildly positive for stocks. This time, it raised even more questions. The Federal Reserve just started its rate-cutting cycle, and Wall Street is worried that a red-hot economy can halt rate cuts for the time being, especially if inflation accelerates again. The world is aware of rising geopolitical risks. An escalation could shock the oil supply and lead oil prices to surge. However, the Fed can’t assume that something would happen. If economic growth and inflation accelerate, they may have no choice but to pause the rate-cutting cycle. - “Friday’s strong jobs report not only appeared to kill any chance of a 50-basis-point rate cut in November, it kickstarted chatter about the Fed leaving rates unchanged if economic data continues to come in hotter than expected,” said Chris Larkin at E*Trade from Morgan Stanley. “But as last week showed, geopolitics can’t be ignored.” It is one of the reasons why stocks haven’t jumped since the jobs report. Some Wall Street analysts are turning bullish, nonetheless. Morgan Stanley’s Michael Wilson boosted his outlook for cyclical stocks that might benefit from a strong economy and future rate cuts. Goldman Sachs’s David Kristin upgraded his 12-month target for the S&P 500 which implies a 10% gain from the current level. The market might take a breather until it gets more data to confirm the current economic picture. The inflation data will be out this Thursday. In the past, Wall Street ignored inflation because it was running close to the 2% pace. Will the strong labor market lead to hotter inflation? That’s what investors will pay attention to. The earnings season is also critical. Big banks will report their results on Friday. If they offered strong guidance, it might bolster the bullish sentiment and kick off another leg in the rally. - “The week ahead is a pivotal one for markets, with key CPI data and the start of earnings season, and we expect these events to confirm our bullish stance on markets and justify our expectations for the S&P 500 to reach 6,150 by year-end,” said James Demmert at Main Street Research. - “The strong jobs numbers from Friday are a reminder to investors that the economy is vibrant, and recession risk is not a factor.” James Demmert at Main Street Research (Photo: CNBC) For example, semiconductor stocks were hot yesterday after Super Micro Computer said it is shipping more than 100,000 GPUs per quarter. These chips are often used for AI, like Nvidia’s popular AI chips. SMC shares skyrocketed 15% after the announcement. It showed that the AI frenzy is still ongoing. Companies are buying GPUs hands over fist. So, everything looks good for the stock market. The key is inflation. As long as inflation remains subdued, the formula is there for stocks to rally again. - “The increasing probability that US economic performance will continue to be ‘hot’ going into 2025 and that the Fed will tolerate this heat, provided inflation isn’t reaccelerating, bodes well for risk assets,” said Jason Draho at UBS Global Wealth Management. - “While investors welcomed the strong jobs report because it eased concerns about a cooling labor market, data that suggests the economy is re-accelerating will stoke fears that a hot economy is at risk of overheating,” Draho said. Top Infrastructure Stock To Bet On The AI Energy Boom Today’s Stock Pick: Argan, Inc. (AGX) The AI Age is screaming for more energy. The faster they can train AI models, the sooner the breakthroughs can happen. But there is not enough energy demand to satisfy power-hungry AI chips. As a result, power infrastructure companies are witnessing a historic demand. Argan is enjoying the boom right now. As a bonus, the power-generating infrastructure is aging. The government is committed to investing in upgrading infrastructure with cleaner energy sources. Argan offers innovative power solutions with efficient gas-fired power plants, biomass projects, solar energy facilities, wind farms, and waste-to-energy facilities. In fact, its Power Industry Services and Industrial Constructions Services segments saw their revenues increase 65% and 52% year-over-year, respectively. (Source: Argan) Argan expects AI power demand to explode at a 70% CAGR through 2027. It is not the only megatrend. EV adoption is expected to grow 20-fold by 2040. The government is encouraging companies to bring factories back home through incentives which creates more energy demands. Companies already committed $525 billion towards the construction of factories since 2021, Argan said. (Source: Argan) Indeed, the project backlog jumped from $714 million in FY22 to $1.03 billion, as of the second quarter of 2025. It is about two times Argan’s full-year revenue for Fiscal Year 2024 ($573 million). (Source: Argan) What’s more, the company has almost zero debt with $485 million in cash. That’s almost equal to the prior fiscal year’s revenues. Its total cash per share is $35.9. It is about 33% of the company’s $109 per share. (Source: Argan) Lastly, the company has a long track record of building its tangible book value and returning cash to shareholders. Its dividend per share is $1.19 which is higher than $0.82 in 2017. Its dividend per share previously jumped to $2.91 per share in 2020 when its revenue grew rapidly. So, there is a slight possibility that Argan would pay out more dividends over the next few quarters if AI demand leads to greater revenue growth. (Source: Argan) Bottom line: The AI Age is only getting started. It is possible that AI chips will become more efficient and require less power down the road, but Argan is poised to enjoy the demand boom in short-term. The stock already moved up a bit, so play this stock with caution. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](